Institutional Investment in Indian Real Estate Set for 14.6% Growth
Optimism in Commercial Office Assets Drives Growth
According to a recent report by Colliers International India, institutional investment in the Indian property market is expected to grow by approximately 14.6% to Rs 395 billion in 2021, up from Rs 345 billion in 2020. This growth comes after a 23% decline in institutional investment in 2020 compared to the previous year.
Commercial Office Assets Remain the Top Choice
- Between 2018 and 2020, commercial office assets accounted for over 54% of the total inflow of Indian real estate, indicating the highest investor interest.
- The six largest cities in India - Bangalore, Mumbai, Chennai, Pune, NCR Delhi, and Hyderabad - witnessed an average annual supply of more than 36 million sq ft of office space during the same period, with most of it being purchased by institutional investors.
Development of New Office Assets on the Rise
Despite the expected continuation of the same level of supply in the market, some investment firms are eager to develop their brand new office assets. Investors remain bullish about the long-term outlook, with an anticipated internal rate of return (IRR) of around 17-18%.
Expert Insight
Piyush Gupta, Managing Director, Capital Markets & Investment Services (India), noted:
“The investment climate in India is very optimistic. And the interest of global investors in real estate assets is getting stronger. With record low global interest rates and positive net yields in India, the country has become one of the preferred destinations for real estate investing.”