Business

Institutional investments in real estate sector tripled to Rs 1,400 billion in 10 years, says report

Updated : August 21, 2019 06:00 PM IST

Grade-A offices with single ownership and limited supply have pushed global investors to close large deals.

Commercial office segment witnessed the maximum share of institutional investments in the past ten years.

Technology upgrade and innovative strategies continue to drive growth making Indian real estate lucrative for occupiers and investors. As a result, investments have more than tripled to Rs 1,400 billion during 2014-18 as compared to Rs 465 billion during 2009-13, says the latest CII-JLL report.

Traditional real estate segments such as residential and commercial have been using modern technology across construction, planning and development for over a decade now.

“India has gradually transformed into an investment destination of international repute post the global financial crisis and real estate and infrastructure have played a vital role. Within the space, adoption of technology coupled with policy reforms is one of the key factors for investors to consider greater participation,” said Ramesh Nair, Chairman, CII Realty and Infrastructure Conclave and CEO and Country Head, JLL India.

"While metros like NCR-Delhi, Mumbai and Bengaluru accounted for 74 percent of the total institutional investments during 2009-18, we expect Tier II and III cities to draw more funds in the coming years. The government’s focus on the growth of smaller cities is leading the change," Nair added.

The report also highlighted that commercial office segment witnessed the maximum share of institutional investments in the past ten years. Rise in the development of environmentally sustainable buildings and subsequent demand from occupiers have added strength to this trend.

Investments in commercial office space rose to Rs 622 billion in 2014-18 from Rs 105 billion in 2009-13, a six-fold jump owing to strong office space demand.

Grade-A offices with single ownership and limited supply have pushed global investors to close large deals. But lower availability of quality assets has led to large investors chasing entity level deals leading to extended investment cycles. As a result, the share of investments in the office segment declined during the first six months of the year as compared to the corresponding period the last year.

Commenting on the investors’ preference, Samantak Das, Chief Economist and Head of Research & REIS, JLL India said, “Investment strategies have shifted to long-term partnerships from being merely opportunistic. There has been a rise in investments in the past decade. Institutional investments in real estate in H1, 2019 stood at Rs 195 billion, reflecting continued momentum of capital infusion. The investment climate, however, in the first half of 2019 was uncertain. Initially, this was due to the NBFC default crisis and later due to general elections.”

Institutional investments in real estate sector tripled to Rs 1,400 billion in 10 years, says report

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