Institutional investors put in $2.9 billion across 22 real estate deals in H1: JLL

Institutional investors invested close to $2.9 billion across 22 real estate deals during the first half of the calendar year.

Institutional investors invested close to $2.9 billion across 22 real estate deals during the first half of the calendar year.

The office sector remained the most favoured, with a 66 percent share, followed by residential and warehousing at 17 percent and 12 percent, respectively. The remaining 5 percent was driven by the hospitality sector, a report by JLL India has said.

Residential sector

The residential sector attracted investment of $512 million across nine deals in H1 2023. This is an increase of 19 percent from H1 in 2022 and by 56 percent from H1 in 2021. The NCR led the share in the investment pie at 44 percent, followed closely by the MMR with 39 percent.

As much as 56 percent of investments in the residential sector were received via domestic players. Additionally, the sector witnessed a commitment of $622 million through platform deals.

Warehousing and hospitality

H1 2023 investment volumes in warehousing stood at $366 million — 80 percent higher than in the same period of 2022. Foreign funding constituted 70 percent of the investment volumes given that the outlook for warehousing remains bullish led by accelerating manufacturing investments, aggressive expansion of e-commerce, and the growth of third-party logistics (3PL) companies. Investments were not restricted to Tier 1 cities but spread across Tier 2 and 3 cities, which are now emerging as major consumption and e-commerce hubs, the report said.

With COVID restrictions lifted across the world, the hospitality sector is back on investors’ radar with a 5 percent share in H1 2023. The total investment volumes for the sector stood at $133.8 million.

Overall, the average deal size of investments increased by 17 percent to $134 million compared to $115 million, an aggregate of the year 2022. The investment pattern continues to be robust and is expected to cross $5 billion in CY 2023, which was the annual trend pre-Covid and in 2022.

Where the capital came from

H1 2023 witnessed a significant increase to a 5-year high in domestic capital, which accounted for 44 percent of the total investment, compared to 18 percent in 2022.

As for external capital, the largest investment came from the APAC region, which accounted for 74 percent of total foreign investments, with the remainder from the Americas.

The last few years have witnessed an increasing trend of portfolio-level investments compared to individual assets. This has led to an aggregation of assets across cities, with multi-cities accounting for 67 percent share of the investment pie. Delhi-NCR attracted $296.6 million followed by MMR at $229.5 million, and Bengaluru at $222.5 million.

“Investor confidence in Indian real estate is increasing steadily. Despite the looming fear of a recession in the US economy and global headwinds, H1 2023 clocked investments close to $3 billion, about 2 percent higher than in the same period last year. This reflects the confidence of investors in the sector's growth prospects and the investor community's confidence in Indian real estate,” said Lata Pillai, Managing Director and Head, Capital Markets, India, JLL.