Institutional investment in real estate rise 37 percent to $1.65 billion in January-March: Report

Investments in alternate assets rose sharply to $158.2 million from $39.8 million

Institutional investment in real estate increased 37 percent to $1.65 billion during January-March, driven by higher inflow in office and housing properties, according to Colliers.

Inflows stood at $1.2 billion in the same period last year, it added. Foreign investors preferred to deploy funds in office assets, while domestic players put more money into housing. The office sector continued to drive the investment inflows, accounting for 55 per cent of the total inflows during the January-March period, the data from real estate consultant Colliers India showed.

The residential segment’s share was 22 per cent. Institutional investment inflows in the office sector rose 41 per cent to $907.6 million during January-March from $643.6 million in the corresponding period of the previous year.

Inflows in residential assets jumped to $361.1 million from $16.5 million. Industrial and Warehousing assets saw a 20 per cent growth in inflows to $216.3 million from $179.9 million. Investments in alternate assets rose sharply to $158.2 million from $39.8 million. Alternate assets include data centres, life sciences, senior housing, holiday homes, and student housing. Retail real estate assets did not receive any investment in the January-March quarter against $257 million in the year-ago period. Inflows in mixed-use projects fell 80 per cent to $15.1 million from $77.3 million.

Colliers noted that global investors remained inclined towards office and industrial assets, and dominated the total investment inflows at 76 per cent share. Larger markets, such as Delhi-NCR and Bengaluru, attracted one-third of the total investments during the quarter. However, the majority of the inflows (63 per cent) were through multi-city deals.

"In the coming quarters, we shall see some large quality assets traded in office and select logistics assets,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, at Colliers India.

Global institutional investors’ appetite for office assets remains strong owing to India’s growing talent pool, digitisation, enhanced transparency in deal structures and stable returns, said Vimal Nadar, Senior Director & Head of Research, Colliers India.

Foreign investments accounted for about 93 per cent of the total investments in office assets during Q1 2023, he said. The institutional flow of funds include investments by families, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign-funded NBFCs and sovereign wealth funds.