Indian real estate investments grew by 32% Y-o-Y to an all-time high of USD 7.8 billion in 2022. On a quarterly basis, investments in Indian real estate stood at USD 2.3 billion in the Oct-Dec quarter, growing by 64% Q-o-Q and 115% Y-o-Y, according to the ‘India Market Monitor 2022’ report by CBRE South Asia Pvt Ltd.
Foreign investors took the lead with a 57% share in the overall investment volume in 2022. Investors from Canada accounted for nearly 37% of the foreign capital inflows, followed by those from the US (15%). Domestic investors contributed the remaining 40% of the total investment in 2022. Overall, institutional investors led the 2022 investment activity with a share of nearly 51%, followed by developers at 32%.
Delhi-NCR led investment activity, followed by Mumbai. Cumulatively, the two cities accounted for over 56% share of the investments in 2022. Land/development sites dominated investments with a share of 48%, followed by the office sector with a 35% share. About 44% of the capital inflows in site/land acquisitions were deployed for residential developments, while 25% went into mixed-use developments.
Commenting on the same, Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “The record investment inflows, the highest ever for the sector, reflect the resilience and growth potential of the Indian real estate sector. Undeterred by global headwinds, equity inflows into the sector are expected to remain steady in 2023. Additionally, we hope to see the listing of India’s first retail REIT in 2023, which would enable investors to expand their investment horizons.”
Gaurav Kumar, Managing Director, Capital Markets and Residential Business, CBRE India, CBRE India, said, “There is a possibility that some large institutional investors could diversify their portfolios by incorporating I&L, retail, and DC assets. We may potentially see a few new set of investors in the real estate segment.”
* Capital flows likely to remain steady; investors expected to remain cautious amidst recessionary fears in the US and Europe.
* The year 2023 could see the listing of India’s first retail REIT, which would widen investment avenues for investors.
* While a few large institutional investors with a strong presence in the office sector in India could diversify their portfolios by including I&L, retail and DC assets, we could also see the entry of some new investors in the Indian RE landscape.
* Partnership models could gain prominence to mitigate risk and navigate operational challenges, especially amidst external uncertainties in the Indian RE landscape.
* Higher financing costs amidst elevated levels of policy rates due to sticky inflation could impact returns in the short-term.