Investments in India's real estate sector increased 32% year on year to an all-time high of $7.8 billion. According to a report by a real estate consultancy firm, quarterly investments in Indian real estate stood at $2.3 billion in the October-December 2022 quarter, up 64% q-o-q and 115% year on year.
“Foreign investors took the lead with a 57 per cent share in the overall investment volume in 2022. Investors from Canada accounted for nearly 37 per cent of the foreign capital inflows, followed by those from the US (15 per cent). Domestic investors contributed the remaining 40 per cent of the total investment in 2022. Overall, institutional investors led the 2022 investment activity with a share of nearly 51 per cent, followed by developers at 32 per cent," said in the reports, titled ‘India Market Monitor 2022’.
It went on to say that the investment activity was led by Delhi-NCR, followed by Mumbai. In total, the two cities accounted for more than 56% of the investments in 2022. Land/development sites dominated investments with a 48% share, followed by the office sector with a 35% share. Approximately 44% of capital inflows in site/land acquisitions went to residential developments, while 25% went to mixed-use developments.
Anshuman Magazine, chairman and CEO (India, South-East Asia, Middle East & Africa) of 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 2d023. Additionally, we hope to see the listing of India’s first retail REIT in 2023, which would enable investors to expand their investment horizons."
"There is a possibility that some large institutional investors could diversify their portfolios by incorporating I&L, retail, and DC assets," said Gaurav Kumar, managing director (capital markets and residential business) of CBRE India. We may see a few new sets of investors in the real estate sector."
According to sources, capital flows are likely to remain steady; investors are expected to remain cautious amidst recessionary fears in the United States and Europe. The listing of India's first retail REIT in 2023 could broaden investment opportunities for investors.