Covid-19 impact: Institutional investments in realty fall 58% in March qtr

Total investments in FY 2019-20 have been the lowest in four years, down by 13% to $4.26 billion over previous year levels of $ 4.78 billion

Institutional investment in Indian real estate was down 58 per cent in the January–March 2020 period, which is one of the highest declines in recent years, said a study.

The decline was influenced by several events, including the Covid-19 outbreak and several high-profile issues in the domestic banking and finance sector in late 2019 and early 2020. 

Total investments in FY 2019-20 have been the lowest in four years, declining by 13 per cent to  $4.26 billion from previous year levels of $4.78 billion, according to the ‘India Capital Markets Update – real estate perspective Q1-2020’ released today by property consultant JLL.

“Investors are expected to remain in a wait-and-watch mode, and caution and risk aversion are expected to drive the dominant behaviour of institutional real estate investors over the next few quarters. The year 2020 will be one of redemption, as the world recovers from one of its most challenging periods in recent history,” said Ramesh Nair, CEO and country head, JLL India.

The impact of change in the investment climate was reflected in the asset allocation, as investors parked more funds in secure and stable office spaces. Investments in the office sector rose to $2.9 billion in FY20 from $1.8 billion in FY19. The Mumbai Metropolitan Region’s investments share grew to 43 per cent of national investments in FY20 from 23 per cent in FY 2018-19.

“The current situation is extremely fluid and it is still too early to provide a detailed, quantitative assessment of the Covid-19 impact on economic activity, industries, and the real estate market. However, office space, followed by warehousing, could witness the return of investments, while the residential sector is likely to revive with government support and concessions,” said Samantak Das, executive director and head of research at JLL India.