Indian Real Estate Witnesses Investments Worth $26.6 Billion From Overseas
In accordance with Colliers, India attracted $26.6 billion in cumulative foreign institutional inflows into real estate from 2017 to 2022, a threefold increase from the previous six years.
Based on Colliers' 'India-High on Investors' Agenda' study, foreign investments in India have increased in recent years as the industry has undergone a transformation, with important structural and policy reforms promoting transparency and ease of business operations.
Furthermore, good economic and business fundamentals are improving institutional investors' sentiments, prompting them to form strategic alliances to expand their portfolios.
During 2017-22, the office sector saw the most investment, accounting for almost 45% of total foreign inflows. While investors continue to be bullish on office assets, their interest in alternative assets is increasing," says Sankey Prasad, Chairman & Managing Director of Colliers India.
According to the research, foreign investments accounted for a sizable 81% of all real estate investments between 2017 and 22. Investor-friendly FDI rules, more transparency in deal structures, and larger direct investment restrictions have encouraged global investors to invest in India's real estate market.
Institutional real estate investments increased 37% year on year to $1.7 billion in Q1 2023, led by the office sector.
In terms of commercial yield, major Indian cities such as Bengaluru and Mumbai rank second and third in the APAC area, respectively. While Bengaluru has the highest office yield in the region, Mumbai has the highest industrial asset yield. Furthermore, with the Indian central bank halting its rate hike streak, bond yields are anticipated to stay range bound.
With the interest cycle forecast to reverse in the next quarters, the yield differential between bonds and real estate is likely to expand, making real estate an appealing option for investors.