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Foreign investors have on average infused $4 billion annually in the last five years as India's economic resilience, coupled with favorable investment climate and rapid urbanization, has enhanced its appeal as a promising investment destination for global funds, said property consulting firm Colliers in a report.
With IMF’s projected GDP growth rate of 5.7% in 2024, India remains one of the fastest-growing economies globally, and one of the most preferred emerging countries within the Asia-Pacific (APAC) region, offering attractive pricing, better valuations, and higher yields, noted Colliers.
Foreign inflows too witnessed a rebound in 2023 registering a 20 per cent year-on-year rise at $3.6 Billion.
"These investments were not confined to traditional avenues but extended to alternative asset classes, bolstering the robust domestic growth in office, residential, and industrial segments. Going forward, investor appetite is likely to remain strong with newer funds looking to enter the Indian market. While strong preference continues for income-yielding office assets, residential, industrial and alternatives are likely to witness renewed interest," said Colliers.
Average annual institutional inflows into India 2019-23 (USD Bn)
“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. ” Chris Pilgrim, Colliers Managing Director of Global Capital Markets, APAC, said.
Sector wise average foreign inflows into India 2019-23 (USD Bn)
While countries such as the US and Canada remain top source countries for capital, leading APAC countries such as Singapore, Hong Kong, South Korea, and Japan are also gradually eyeing India's growing real estate market. In 2023, Investment inflows from the APAC region surged 57 per cent on year to $1.8 billion, of which 70 per cent were in office assets.
However, apart from office assets, APAC countries have also shown interest in residential, industrial, and warehousing assets. During 2023, the inflows almost doubled since 2019, signaling a significant uptick in investor interest and confidence in India's real estate sector.
Investment inflows from APAC region in Indian real estate (2019-2023)
“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.
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Institutional investments in the Indian real estate sector continue to rise at a steady pace, closing at $5.4 billion during 2023, a 10% rise YoY. While foreign investors continued to maintain a strong presence, contributing 67% of the total inflows in 2023, domestic investments have also seen an impressive YoY rise by 66% to $1.7 billion.
2023 witnessed the highest levels of investment inflows since 2020, showcasing India's resilience despite uncertainties in global markets. The inflows were more broadbased, with significant investments coming into alternative assets, adding to the strong domestic upswing in the office, residential and industrial segments.
