Institutional investment in real estate is likely to rise by 4 per cent to USD 5 billion (Rs 36,500 crore) during this calendar year with investors looking to snap up properties at attractive valuations amid the COVID pandemic, according to property consultant Colliers India. Institutional investment in real estate stood at USD 4.8 billion during 2020.
Investment in the Indian real estate sector stood at USD 2.9 billion (Rs 21,170 crore) during the first six months of 2021 calendar year, more than a two-fold increase from the year-ago period. “We estimate total inflows in 2021 will reach USD 5 billion (Rs 36,500 crore),” Colliers India said in a report released on Tuesday. The consultant said that investors continue to have a healthy appetite for office assets, which accounted for 35 per cent of the total investments in the first half of this year.
During January-June this year, the industrial and warehousing sector saw USD 775 million (Rs 5,657 crore) of investments, the highest in any year since 2016. It’s share was 27 per cent to the total institutional investments in real estate. “Investors are viewing the current scenario as an opportunity to snap up properties at attractive valuations,” the report said. The residential sector, which continues to see liquidity challenges, saw only 4 per cent of the total investments in January-June 2021, with debt deals being the dominant route of investments.
In the first half of 2021, data centers saw investments of about USD 161 million (Rs 1,175 crore), with corporates tying up with global data center providers. “Investments in retail assets accounted for 29 per cent of the total investments in H1 2021. Despite COVID posing a significant disruption to retail businesses and causing a major drop in rental revenues, investor appetite remained intact for exposure to stabilised retail assets as well as for investments in ground-up developments in partnership with selective developers,” the report said.
Over the next three years, Colliers expects that more capital will be deployed in build-to-core mixed-use, office and logistics assets as more investment platforms are formed between global private equity funds and local developers. The consultant recommended that investors look at last-mile funding in the residential sector, which is witnessing some latent demand. “We expect momentum to build around logistics assets, life sciences labs and data centers as investors diversify away from traditional office investments,” Colliers India said.