Institutional investments in Indian real estate dropped 58 per cent in the January-March period to USD 712 million (around Rs Rs 5,454 crore) as inflows were negligible last month because of nationwide lockdown to control coronavirus disease, according to JLL India.
The fund inflow stood at USD 1,704 million (around Rs 13,055 crore) in the year-ago period. The investment in March was USD 28 million.
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Investments during FY 2019-20 dipped by 13 per cent to USD 4,261 million, a four-year low, from USD 4,870 million in the previous fiscal, mainly due to less inflow in the last quarter.
Institutional investors include family offices, foreign banks' real estate investment desks, pension funds, private equity firms, real estate investors- cum-developers, sovereign wealth funds and foreign firms.
"Restriction on movement of people due to complete lockdown and lack of clarity on impact of the pandemic on the economy resulted in the investment process grinding to a halt. As a result, March 2020 saw abysmally low investment levels of just USD 28 million," JLL said in the report.
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"The impact of COVID -19 virus has been unthinkable in its scope. Investors are expected to remain in a wait-and-watch mode, with caution and risk aversion is expected to drive the dominant behavior of institutional real estate investors over next few quarters," said Ramesh Nair, CEO and Country Head, JLL India.
The year 2020 will be one of redemption, as the world recovers from one of its most challenging periods in recent history, he added.
"The currently 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 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, JLL India.
Institutional investments in Indian real estate during January to March 2020 typically act as a curtain raiser for the year to follow and, hence, assume great significance, the report said.
The consultant said that "events, both financial and otherwise, have rattled the investment momentum in India".
The supersession of the Dewan Housing Finance Limited (DHFL) board by the Reserve Bank of India (RBI) in November 2019, followed by Yes Bank in March 2020, created uncertainty among the investment community, it said.
"Add to it the black swan event of the COVID-19 pandemic with its varied and unexpected side effects on economic growth, has left everybody scurrying for safety," the report said.
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