Foreign investors inject over $4 billion annually into Indian real estate: Colliers report

India's robust economic resilience, complemented by a conducive investment environment and swift urban development, has positioned it as a compelling investment hub within the Asia-Pacific region. 

Consequently, numerous new funds are actively considering the market, while established global and sovereign funds such as Mubadla, Mitsubishi Fudson, PAG Credit & Markets, Cadillac Fairview, Korea Investment Corp, and PNB Malaysia are either expanding their investments or establishing fresh collaborations to leverage the burgeoning opportunities presented by the Indian market.

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“2024 is anticipated to be a more dynamic year for the both the Asia Pacific real estate markets as well as capital in the region remaining the dominant investor in global real estate. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s diversity and increased opportunity,” said Chris Pilgrim, Colliers Managing Director of Global Capital Markets, APAC, said.

India's robust economic resilience, combined with a conducive investment environment and swift urban development, has bolstered its allure as a highly promising investment hub for international funds.

With the International Monetary Fund (IMF) forecasting a GDP growth rate of 5.7% by 2024, India continues to stand out as one of the fastest-growing economies worldwide and a top choice among emerging nations in the Asia-Pacific (APAC) region. Its appeal lies in attractive pricing, superior valuations, and promising yields for investors seeking lucrative opportunities.

In 2023, foreign inflows experienced a resurgence, marking a 20% year-on-year increase to reach $3.6 billion. These investments transcended traditional channels, expanding into alternative asset classes, thereby strengthening the robust growth in domestic office, residential, and industrial segments.

Looking ahead, investor enthusiasm is poised to stay robust, with fresh funds eyeing entry into the Indian market. Although income-generating office assets remain a top choice, there's a renewed interest expected in residential, industrial, and alternative sectors.

"Investments in Indian Real Estate have been consistent for the past few years and have an innate potential to grow further on account of structural changes in demand for capital. Global investors have always remained at the forefront and consistently infused average $4 Billion annually in the last five years, showcasing continued commitment and confidence towards the sector. With a rise on performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures the sector is poised to attract even more investments in the next few years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. 

APAC nations show increased interest in Indian real estate

While countries like the US and Canada continue to be primary sources of capital, prominent APAC nations such as Singapore, Hong Kong, South Korea, and Japan are increasingly turning their attention to India's burgeoning real estate market. In 2023, investment inflows from the APAC region surged by 57% year-on-year, totaling $1.8 billion, with 70% allocated to office assets. 

However, besides office properties, APAC countries have also demonstrated interest in residential, industrial, and warehousing assets. The influx of investments nearly doubled since 2019, indicating a substantial rise in investor enthusiasm and confidence in India's real estate sector.

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Looking ahead of 2024, investors are poised to ramp up their engagement in India's real estate sector. This surge is fueled by the country's strong economic growth, favorable business conditions, and burgeoning demand across various sectors. The expectation of heightened activity signifies confidence in the policy landscape, a diminishing disparity between buyers and sellers, and investors' eagerness to allocate greater capital across different real estate asset classes.

“In 2023, a striking 90% of investment inflows into India's office sector originated from foreign investors, demonstrating strength of the underlying asset class. This marks a transformative period for the industry. Furthermore, as sustainability gains further prominence in investment decisions, the real estate sector including office market of India is set to align seamlessly with global Environmental, Social, and Governance (ESG) standards,”, said Vimal Nadar, Senior Director and Head of Research, Colliers India.