Real-estate services and investment management firm, Colliers India in its latest findings reported that institutional investment volumes into the real-estate sector closed at US$4 billion in 2021. Although it’s a 17% dip YOY, capital flows came on a broad-based recovery across most asset classes, geographies and doubled in the number of deals compared to 2020. Further, the dip is noticed as some large transactions had concluded in 2020. 2021 has been one of the best years for the industrial & logistics and residential sectors, accounting for about half of the total investments at about US$2 billion.
The industrial and logistics sector was the most sought-after and investments rose to a five-year high of US$1.1 billion. This was also more than a five-fold increase from 2020. The sector has been drawing strong operator and investor interest due to increased demand from e- commerce and 3PL players post pandemic. This growth momentum is likely to continue in 2022, as major global investors and developers continue to expand their footprint in proximity to high consumption areas across tier I and II cities.
On the other hand, the Office sector attracted the highest investments at US$1.2 billion, accounting for 31% of the total investments in 2021. This reaffirms the resilience and the long-term growth story of the sector.
Data centres garnered the highest share of about 60% in total investments in alternate assets in 2021. We expect investments in data centers to further accelerate in the next 2-3 years, a major data centre and digital infrastructure companies are creating platforms and JVs to expand their presence in India.
Along with data centers, investor’s appetite towards student housing and life sciences sectors increased during 2021, with major private equity investors such as Warburg Pincus and Cerestra making investments in the sectors. In 2021, Canada based Ivanhoe Cambridge committed investments worth US$100 million to develop a 1 mn sq ft of life science and R&D office labs in Genome Valley, Hyderabad.
“The pandemic has accelerated a number of structural trends and will have lasting changes on the nature of real estate business in India. The Investments across asset classes have seen promising inflows in 2021 reflecting several opportunities for investors to recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the residential, increasing development of data centers, alternatives, industrial, office as well as the evolution of the life science sector. There is a reflection of confidence in the industry to participate in the growth story and hence develop, build and own real assets in long term,” says Piyush Gupta, Managing Director- Capital Markets and Investment Services, Colliers India.
“The year 2021 has seen a strong investor appetite for residential and industrial & logistics sectors while office continues to be dominant. The former breached record highs in recent times lapping up nearly USD2billion of the overall institutional investment volumes. This resonates the strong fundamentals and attractive valuations of the underlying assets supported by a positive economic outlook. The broad-based recovery signals signs of ebullience amongst investors and expansion of REITs, asset diversification, imminent potential in industrial & logistics will keep them busy in the Indian market. Moreover, niche asset classes such as Data centers, student housing and life science will provide a unique opportunity for investors to diversify their investments,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.
