Capital Inflows Jumps Three-Fold Into Indian Real Estate: Report

Foreign capital flows into the Indian real estate jumped over three-fold to $23.9 billion during the 2017-21 period as compared to the previous five years, according to Colliers-FICCI report.

In its report 'Foreign investments in Indian real estate turn a corner', property consultant Colliers mentioned that the global investors had shown an increased inclination towards investment in Indian real estate buoyed by regulatory reforms introduced in 2016.

"Foreign investors, who had previously refrained from investing in the Indian real estate market due to the lack of transparency, started investing in the country with greater optimism from 2017," Colliers said.

According to the data, foreign investment in real estate stood at $23.9 billion during the 2017-21 period against $7.5 billion during 2012-2016.

Total investments in Indian real estate stood at $49.4 billion during the 2012-2021 period, of which 64 per cent came from foreign investors.

The share of foreign investments in Indian real estate has grown to 82 per cent during 2017-2021, compared to 37 per cent in the preceding five-year period.

During 2017-21, the office sector had a 43 per cent share in total foreign investments, followed by the mixed-use sector accounting for 18 per cent.

The industrial and logistics sector investments stood at third position, surpassing the residential sector.

Foreign investors remained cautious about the residential sector in the aftermath of the NBFC crisis and subdued residential sales, Colliers said.

The share of residential assets in total foreign investments reduced to 11 per cent in 2017-2021, from 37 per cent in a preceding five-year period.

Foreign investments in the office sector had consistently reached $2 billion in each year since 2017 except in 2021, when the quantum of investments almost halved.

During 2017-21, alternative assets saw an inflow of about $1 billion, most of it coming during the pandemic years.

"Government policy for data localisation and infrastructure status received for data centres recently are likely to give a boost to the establishment of new data centres in the country," the consultant said.

The share of investments from the USA and Canada together has been more than 60 per cent in foreign investments each of the years since 2017.

Despite the challenges posed by the pandemic, the funds from USA and Canada continue to actively explore the industrial segment, apart from the office and mixed-use assets.

Similarly, most of the investments from Asia are targeted towards the office and industrial and logistics sectors.