Alternative Investment

institutional investment: Commercial assets accounts for 60% of institutional investment, says new report

Institutional investment in Indian real estate recorded an inflow of USD 3.4 billion during the first nine months of 2022, according to a report by Vestian, in association with FICCI.

While commercial assets remain the preferred asset class of investors, accounting for 60% share of total investment in in 2022 (Jan-Sep), residential assets observe resurgence – its share rising to 27% in 2022 from a mere 4% share in 2020

“Close to 14 million square feet of absorption would be recorded during January-December this year. The bounce from April 2023 will be very strong given that the supply is extremely limited, rentals are firming up, and access to capital is constrained,” said Sanjay Dutt, Joint Chairman of FICCI Real Estate Committee and MD & CEO, Tata Realty & Infrastructure Ltd.

Foreign funds share has been constantly eclipsing India-dedicated funds in the total investment pie. In the first nine months of 2022, foreign funds accounted for 89% of commercial assets and 58% of residential assets, of the total real estate investment

“The real estate sector of the country has shown considerable resilience. Continued traction in institutional investment in the sector during the year signifies investors’ confidence despite economic constraints, inflationary pressure and the continuing pandemic impacting the business environment,” said Shrinivas Rao, FRICS, CEO, Vestian.

“We believe that with the government working towards augmenting ease of doing business, growth in IT sector, and immense prospects held by alternative assets, institutional investment in real estate will emerge stronger in the forthcoming period,” said Rao.

The retail sector has been gradually regaining ground – from a minimal share of 8% in the total commercial assets investment in 2021, investment in retail has increased to 14% in YTD 2022, thus boding well for the segment.

The co-working space segment holds good investment opportunities as well, post a brief period of uncertainty clouding its growth prospects in 2020; its share in total absorption has increased from 10% in 2018 to nearly 18% in 2022 (YTD).

Investment has been gaining momentum in warehousing & logistics, led largely by ecommerce entities and their increasing need for last mile delivery. Substantial quantum of investment is also making gradual in-roads into alternative asset classes, comprising data centres and life sciences R&D centres.

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