The Real Estate Market in India Attracts More Attention from Global Investors!
Despite the global recession, India’s real estate sector has remained resilient. Q-o-q demand growth across asset classes has continued to outpace the rest of the market, making the real estate sector the most sought-after instrument by global investors. As a result, several global sovereign wealth funds accelerated their investments in India, driving the sector’s upward growth trajectory. The Indian real estate sector attracted 43% of global institutional investment in the first six months of 2023, led by the office segment. Despite a difficult global economic environment, these investments account for 75% of total inflows in 2023, showing the resilience of the real estate sector and its attractiveness to institutional investors.
Foreign investors are increasingly turning to the Indian real estate sector due to the high demand for grade-A office spaces and the numerous corporate headquarters being established in key Indian cities. Additionally, the residential segment has seen a significant increase in foreign investment due to the improved housing market and the resurgence of the luxury segment. In November 2022, Kotak Investment Advisor secured a $500 million anchor investment from the Abu Dhabi Investment Entity, one of the largest global sovereign funds, to form a $1 billion real estate platform for K2A’s 13th Real Estate Fund. Additionally, sources have indicated that Goldman Sachs is actively involved in the space, to invest $2-$3 billion in India over the next two to three years.
The Logistics and Warehousing sector has been particularly active in attracting foreign investment, with the warehousing sector accounting for approximately 9% of total investment inflows in H1 2023 at $350 million, which is a two-fold increase from the previous year. Foreign investment in this segment accounted for 76% of the total inflow during the same period. Additionally, the government’s proactive policies have been instrumental in attracting global funds to the real estate sector, placing it in a strong position. Recently, the Reserve Bank of India has opened up the debt instruments of Real Estate Investment Trusts (REITs) and InvITs to global investors, allowing them to invest capital through voluntary retention and mid-term frameworks. This will open up new opportunities for these funds to expand their horizons and further strengthen the country’s real estate sector.
On the whole, global investors are optimistic about the current real estate market, which is experiencing its most dynamic period to date. Industry professionals believe that the sector not only offers a lucrative investment opportunity for institutional global investors, but also provides a powerful tool for value creation from a return perspective. As a result, investors are expected to continue to allocate capital to assets that span multiple development cycles in order to achieve the optimal combination of risk and return.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
