Institutional real estate investment increases by more than 6 times to USD 492 million in 2022, according to a report

Institutional investments in retail real estate jumped over six fold to USD 492 million in 2022, as businesses in shopping malls revived strongly post the Covid pandemic, according to Colliers India. In 2021, the retail real estate had attracted only USD 77 million institutional investments because of an adverse impact of the Covid pandemic on the businesses in shopping malls.

Overall, Colliers said that the institutional investments in the Indian real estate sector grew 20 per cent in 2022 to touch USD 4.9 billion from USD 4.08 billion in the previous year. Alternate asset classes, which includes data centres, received an investment of USD 867 million last year, up 92 per cent from USD 453 million in 2021.

Alternate assets include data centres, life sciences, senior housing, holiday homes, and student housing among others. The growth of alternate assets is led by investors looking to diversify their portfolio, given steady returns in some traditional asset classes, Colliers India said.

Data centres accounted for about 52 per cent of the investments in alternate assets. Out of the total inflows, the office market got 41 per cent share. Institutional investments in office assets rose 50 per cent in 2022 to USD 1.98 billion from USD 1.32 billion in the previous year. Investments in mixed use projects also jumped to USD 464 million from 182 million.

However, industrial & warehousing assets saw a decline of 63 per cent to USD 422 million from USD 1,130 million (USD 1.13 billion). Residential segment witnessed a fall of 29 per cent in inflow to USD 656 million in 2022 from USD 919 million in the previous year. “The investments in Indian real estate have been consistent for the past few years and hence have the potential to grow due to the structural change in demand for capital,” said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.

Performance credit, special situations, portfolio acquisitions, asset reconstruction, and related structures have been growing and are likely to attract more investments, he added. “During 2023, while we may see some postponement in deployment, there is ample dry powder in the market across core assets and alternate assets,” Gupta said.

Vimal Nadar, Senior Director and Head of Research, Colliers India, said the share of domestic investment inflows in 2022 has surpassed the share in 2021, accounting for 22 per cent share in total inflows. Residential assets continue to account for a chunk of the domestic investments, he added. “Overall, though the total investment inflows are yet to outrun the pre-pandemic levels, investors remain vested in India’s real estate even in challenging times. Large global investors will continue to partner with domestic firms to set up investment platforms,” Nadar said. Colliers India is one of the leading property consultants in the country.