Why institutional investment in real estate likely to fall this year
Institutional investments in real estate could fall 20 percent to $ 4 billion this calendar year due to higher cash inflows in 2020, according to real estate consultant JLL India.
Institutional investments for the January-September period increased to $ 2,977 million from $ 1,534 million in the prior year period.
“Unless some large portfolio deals are signed by the end of the year, annual investments are projected to be in the range of $ 3.8 billion to $ 4 billion in 2021,” JLL said in a statement.
Institutional investments managed to break the $ 5 billion mark in 2020 due to large portfolio deals worth $ 3.2 billion in the last quarter of the year.
“In 2021, however, there was a broader recovery with 31 deals in the first nine months compared to 19 deals in the same period in 2020,” she noted.
Looking to the outlook for next year, JLL India expects investments to exceed USD 5 billion, which was recorded annually by Indian real estate in the period 2017-2020.
Institutional cash flow includes investments from family offices, overseas corporate groups, overseas banks, own books, pension funds, private equity, real estate funds with developers, foreign-funded NBFCs, and sovereign wealth funds. It also includes anchor investors in REITs.
“Investors have allocated fresh capital to the office sector as well as the residential segment, which has seen a smart recovery, while inventory and data centers continued to attract investment,” said JLL India.
The retail sector has seen capital tied up through investment platforms that remain bullish on their growth prospects, he added. Radha Dhir, CEO and Country Head, India, JLL, said, “The performance of institutional investments in Indian real estate in 2021 can be summarized under one theme – ‘increasing immunity to uncertainty’.”
The Indian economy is expected to continue to gain strength and broad-based investment growth thanks to a low interest rate environment, sustained monetary stimulus, improved earnings transparency across all asset classes and an inclusive growth policy, she added.
Listing REITs, distressed opportunities, wealth diversification, high-growth data centers and logistics segments will drive investment momentum in 2022, Dhir said.
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