There was an almost 26% increase in institutional investments into alternate assets such as data centres, student housing, senior living and co-living in India that witnessed an inflow worth $500 million last year, said a report by Colliers.
Robust technology consumption and data privacy laws will also pave way for further investments in the data centers space, with investors and developers exploring development options, the report added.
The overall institutional investments in real estate fell to $4 billion in 2021 from $4.8 billion in the previous year and $6.2 billion in 2019.
Real estate institutional investment volumes closed at $4 billion in 2021 compared to $4.8 billion in the previous year and $6.2 billion in 2019. Although it is a 17% dip YoY, capital flows came on a broad-based recovery across most asset classes, geographies and doubled in the number of deals compared to 2020, according to the report.
The industrial and logistics sector and the residential sector accounted for about half of the total investments at about $2 billion. The luxury segment accounted for about 35% of the total investments in the residential segment. The office sector attracted the highest investments at $1.2 billion, accounting for 31% of the total investments in 2021.
“The real estate business in India is witnessing significant transformation with a flight to high quality, technology, governance, and customer service. New business avenues such as data warehousing, shared spaces (be it office or residential), and Proptech are emerging with these changes. The confidence in residential is back with improved governance, timely deliveries, a positive sentiment supported by increased liquidity in the sector. Special situation and credit funds are aiding in resolving stressed situations,” said Piyush Gupta, managing director, Capital Markets and Investment Services, Colliers India.
Apart from data centers, there is likely to be more focus on greenfield assets in the industrial sector in 2022, led by strong demand from e-commerce companies. The industrial and warehousing segment saw investments at a five-year high at $1.1 billion.
Green financing through green bonds will also see greater acceptance this year in India as developers, asset owners and investors turn their focus to sustainable development. This trend has further been accelerated by the pandemic across geographies.
The residential sector saw investments of $900 million, the highest in four years. The affordable and mid segments accounted for 64% of the investments, signaling this is where the action is. The residential sector will continue to garner investments, both from private-equity players and Grade A developers looking for distressed properties in good locations."Overall, we expect deal-making to pick up post Q1 2022 as concerns regarding the Omicron variant starts subsiding,” said Vimal Nadar, Senior Director and Head, Research, Colliers India.