Real estate institutional investment volumes in India closed at USD 4 billion in 2021 registering a dip of 17 percent year-on-year, according to a report of Colliers, a leading professional services and investement management firm.
Analysing the trends, the report said capital flows came on a broad-based recovery across most asset classes, geographies and doubled in the number of deals compared to 2020. Further, the dip is noticed as some large transactions had concluded in 2020. 2021 has been one of the best years for the industrial & logistics and residential sectors, accounting for about half of the total investments at about USD2 billion.
The office sector attracted the highest investments at USD1.2 billion, accounting for 31 % of the total investments in 2021. This reaffirms the resilience and the long-term growth story of the sector
On the other hand, the industrial and logistics sector was the most sought-after, and investments rose to a five-year high of USD1.1 billion. This was also more than a five-fold increase from 2020. The sector has been drawing strong operator and investor interest due to increased demand from e-commerce and third party logistics players (3PL) players post pandemic. This growth momentum is likely to continue in 2022, as major global investors and developers continue to expand their footprint in proximity to high consumption areas across Tier I and II cities.
Pandemic induced trends
“The pandemic has accelerated a number of structural trends and will have lasting impact on the nature of real estate business in India. The Investments across asset classes have seen promising inflows in 2021 reflecting several opportunities for investors to recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the residential, increasing development of data centers, alternatives, industrial, office as well as the evolution of the life science sector. There is a reflection of confidence in the industry to participate in the growth story and hence develop, build and own real assets in long term.” says, Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.
“The year 2021 has seen a strong investor appetite for residential and industrial & logistics sectors while office continues to be dominant. The former breached record highs in recent times lapping up nearly USD 2 billion of the overall institutional investment volumes. This resonates the strong fundamentals and attractive valuations of the underlying assets supported by a positive economic outlook. The broad-based recovery signals signs of ebullience amongst investors and expansion of real estate investment trusts (REITs), asset diversification, imminent potential in industrial & logistics will keep them busy in the Indian market. Moreover, niche asset classes such as data centers, student housing and life science will provide a unique opportunity for investors to diversify their investments,” says, Vimal Nadar, Senior Director and Head of Research, Colliers India.
