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Indian real estate witnesses investments worth $943 million in Q1 2022, a jump of 41% over last quarter: JLL

The sector attracts almost $63 billion institutional investment since 2006, the report said.

Representative Image (Reuters)

Representative Image (Reuters)

Indian real estate witnessed investments worth $943 million in Q1 2022 which is a jump of 41 percent over the last quarter. While domestic capital chased deals in the residential sector, foreign investors were largely seen focusing on commercial assets, according to JLL’s India Capital Market Review.

Dedicated investment platforms have also come a long way with a total announcement of $19 billion commitments from 2012-March 2022. Investment platforms are like co-investment vehicles formed to invest in a large pool of assets in the same sector.

Of these 79 percemt of the platforms were formed during the last seven years primarily led by market-friendly reforms like Real Estate Investment Trusts (REITs) and Goods and Services Tax (GST).

The sector has attracted $62.8 billion of institutional investment since 2006, driven by a series of reforms in the sector, it said.

“The lifting of restrictions led to a pick-up in investment momentum during Q1 2022. This quarter saw a 41 percent jump in institutional investments over Q4 2021. While domestic capital chased deals in the residential sector, foreign investors were largely seen focusing on commercial assets. Healthy leasing momentum has brought back-office demand with investors entering JVs/ development partnerships. Retail also continued to see good traction with some opportunistic deals in the market,” said Lata Pillai, Managing Director and Head, Capital Markets, India, JLL.


“Deal flow currently looks very healthy, with $943 million transacted in Q1 and with several large deals in the pipeline we expect 2022 investment volumes to be at par with 2018 and 2019 (Pre-Covid) levels. Data centre and warehousing would remain sectors to watch out for as many hands chasing few opportunities will lead to competitive pricing and compressing cap rates,” she added.

$62.8 billion investments in real estate driven by increasing reforms

The series of reforms that started in 2014 led to increased capital flows over the years. Out of the total Institutional investment of $62.8 billion from 2006 to March 2022, 58 percent was received from 2015 onwards. The key reforms like the introduction of REITs in 2014, the Real Estate and Development) Act (RERA) in 2016, the Benami Transactions (Prohibition) Act, GST, and the progressive relaxation of foreign direct investment (FDI) norms over the years led to improved transparency, accountability, professional management, and development of markets for smoother entry and exit of capital.

The positive impact of the reforms resulted in investments to the tune of $36.7 billion flowing into Indian real estate from 2015- to Q1 2022.

“The preference of large investors for active participation in the investment process and focused asset classes has led to the rise of joint venture/club type investment platforms. Dedicated investment platform deals/funds which were first initiated in 2012 have come a long way with a total announcement of $19 billion commitments till March 2022. The warehousing sector post-GST reforms witnessed platform funds accounting for the highest share of 34 percent of the $19 billion commitments announced. The affordable housing segment which has seen a regulatory push in the last few years has seen focused platforms accounting for an 18% share of the total announced,” said Samantak Das, chief economist and head of research and REIS, India, JLL.

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Moneycontrol News
first published: Apr 25, 2022 07:35 pm
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