Indian real estate receives an average investment of $4billion from foreign investors
Colliers has recently launched its latest insights into the dynamic year ahead forecast for the Asia Pacific real estate industry. Colliers’ 2024 Investor Insights – Country Spotlight Series provides real estate investors and owners with unique insights into the year ahead and a deep understanding of key markets across the Asia Pacific region.
“2024 is anticipated to be a more dynamic year for the both the Asia Pacific real estate markets as well as capital in the region remaining the dominant investor in global real estate. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s diversity and increased opportunity. ” Chris Pilgrim, Colliers managing director of global capital markets, APAC, said.
Key findings include:
Singapore: Singapore has earned a reputation as a safe haven and a highly favourable base for global real estate investments; it stands out for those looking to invest in quality core assets, offering long-term capital appreciation and stable yields for decent total returns.
China: Almost all asset classes have experienced price corrections, presenting a favorable opportunity for long-term investors. C-REITs offer alternative exit channels for investors and help attract more domestic capital.
India: India’s economic resilience, coupled with favorable investment climate and rapid urbanization, has enhanced its appeal as a promising investment destination for global funds.
With the IMF’s projected GDP growth rate of 5.7% in 2024, India remains one of the fastest-growing economies globally, and one of the most preferred emerging countries within the Asia-Pacific (APAC) region, offering attractive pricing, better valuations, and higher yields.
Foreign inflows too witnessed a rebound in 2023 registering a 20% YoY rise at $3.6 billion. These investments were not confined to traditional avenues but extended to alternative asset classes, bolstering the robust domestic growth in office, residential, and industrial segments. Going forward, investor appetite is likely to remain strong with newer funds looking to enter the Indian market. While strong preference continues for income-yielding office assets, residential, industrial and alternatives are likely to witness renewed interest.
“Investments in Indian Real Estate have been consistent for the past few years and have an innate potential to grow further on account of structural changes in demand for capital. Global investors have always remained at the forefront and consistently infused an average $4 Billion annually in the last five years, showcasing continued commitment and confidence towards the sector. With a rise in performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures the sector is poised to attract even more investments in the next few years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.
India’s real estate sector sees rising interest from the APAC countries
While the United States and Canada continue to be primary sources of capital, notable Asia-Pacific (APAC) countries like Singapore, Hong Kong, South Korea, and Japan are increasingly focusing on India’s burgeoning real estate market. In 2023, investment inflows from the APAC region surged by 57% year-on-year to $1.8 billion, with 70% of investments directed towards office assets. However, beyond office spaces, APAC nations have also displayed interest in residential, industrial, and warehousing assets. The inflows nearly doubled from 2019 to 2023, signaling a significant rise in investor confidence and interest in India’s real estate sector.
Looking forward to 2024, investors are anticipated to ramp up their activity in India’s real estate market, propelled by robust economic performance, a favorable business environment, and strong demand across both core and alternative sectors. This increased activity reflects growing certainty around the policy environment, a narrowing gap between buyers and sellers, and investors’ eagerness to deploy more capital across various real estate asset classes.
“In 2023, a striking 90% of investment inflows into India’s office sector originated from foreign investors, demonstrating strength of the underlying asset class. This marks a transformative period for the industry. Furthermore, as sustainability gains further prominence in investment decisions, the real estate sector including office market of India is set to align seamlessly with global environmental, social, and governance (ESG) standards,” said Vimal Nadar, senior director and head of research, Colliers India.
Looking ahead to 2024, investors are expected to increase their activity in India’s real estate market, driven by a robust economic performance, positive business environment and robust demand across core and alternative sectors. Anticipation of heightened activity in a way reflects certainty around the policy environment, narrowing gap between buyers and sellers and investor intent to deploy more capital across real estate asset classes.
