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India Real Estate Insulated Even As Recession Woes May Delay Fund Deployment: Colliers

India's real estate sector continues to see institutional investment even as global recessionary concerns loom, Colliers says.

<div class="paragraphs"><p>(Photo: Jason Dent/Unsplash)</p></div>
(Photo: Jason Dent/Unsplash)

Indian real estate continues to see institutional investment pouring in even as global recessionary concerns loom, according to Colliers International.

“With global investors partnering with local developers, there is ample dry powder to be invested in the Indian real estate market, especially in the office and the industrial sectors,” Vimal Nadar, senior director and head of research at Colliers India, was quoted as saying in a report. “Over the next few quarters, while there may be some slowdown in deployment of funds due to the recession, the Indian market is relatively well-insulated and investors continue to view it favourably.”

Piyush Gupta, managing director-capital markets and investment services at Colliers India, said the sentiment of global investment firms to invest in India “remains strong in spite of global slowdown trends”. The current state of economics, with respect to inflation and interest rates, he said, is not perceived to have a long-term impact.

India’s real estate sector witnessed institutional investments worth $3.6 billion (Rs 29,636 crore) during January-September 2022, up 18% year-on-year, the report said. That was driven by the office sector that accounted 50% share, followed by retail which clocked a few large deals.

The office sector, it said, has seen a “healthy recovery” since late last year with occupiers leasing large spaces as now offices are seen as a place for collaboration. Institutional investors are eyeing greenfield and ready office assets with large portfolios, aiming to bundle them up as REITs, or real estate investment trusts, in the future, the report said.

The capital in Indian real estate, according to Gupta, is getting more “broad-based with active participation” also from domestic institutional and retail Investors. “Domestic capital is seen to flow across asset acquisitions, with credit in multiple asset classes with varied pooled structures.”

Domestic investors, Colliers said, have become more active in the market, with their investment inflows accounting for 18% share (January to September) against 14% a year ago. Still, global investors continue to “dominate funding activity with higher participation in entity-led deals”.

Multi-City Deals

Multi-city deals, according to the report, continued to increase, with a 45% share in investments year-to-date. Majority of these deals were “entity-led for office assets” as investors lap up investment-grade office portfolio.

The year 2022 has also seen several platform deals between institutional investors and developers for specific sectors, with industrial and logistics assets “high on investors’ radar”.