The increasing share of institutional investments in the Indian real estate sector has been a result of technology upgrades and innovative strategies, making it lucrative for occupiers and investors.
Foreign investment in the Indian real estate sector has seen a boom in the last few years. The investment tripled to Rs 140,000 crore during 2014-18, compared to Rs 46,500 crore during 2009-13, says the latest CII-JLL study. The increasing share of institutional investments in the Indian real estate sector has been a result of technology upgrades and innovative strategies, making it lucrative for occupiers and investors. Delhi NCR, Mumbai and Bengaluru remained the top three favourite destinations for the investors, accounting for 74 per cent of the total foreign institutional investment in the Indian real estate sector in the last decade.
“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,” said Ramesh Nair, Chairman, CII Realty and Infrastructure Conclave and CEO & Country Head, JLL India. FIIs in tier 2 and 3 cities are likely to come in the coming years, which is driven by the government’s focus on the growth of smaller cities, he added.
Due to strong office space demand, investments in commercial office space rose six-folds to Rs 62,200 crore in 2014-18 from Rs 10,500 crore in 2009-13. Modern technology across construction, planning and development and policy reforms like the concept of shared economy giving rise to new asset classes such as co-living, co-working spaces and technology-driven businesses have together made it more feasible for occupiers and investors, said the report.
“From being merely opportunistic, the investment strategies have shifted to long-term partnerships,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL India. Institutional investments in real estate in the first half of 2019 stood at Rs 19,500 crore, reflecting continued momentum of capital infusion, he added. The rise in the development of environmentally sustainable buildings and subsequent demand from customers have added strength to the trend. Despite the NBFC crisis and general election, the investments in the Indian real estate sector showed a significant uptick.