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Foreign investors, primarily from North America and Singapore, have poured over $18 billion into the Indian real estate market, making up 58% of total equity investments from 2018 to 2022, according to a recent report by CBRE South Asia. These investors have consistently been the largest foreign contributors to equity investments, with North America accounting for 41% and Singapore for 8%..
Between 2018 and 2022, the Indian real estate sector saw a total investment of $43.3 billion, with $31.8 billion in equity investments and $11.5 billion in debt investments. Cross-region investments, mainly from countries outside the Asia-Pacific (APAC) region, dominated with a 47% share, followed by domestic investments at 42%. The remaining share came from intra-region (APAC countries) investments.
The office sector remained the primary focus for investors, especially foreign institutional investors, attracting nearly $13 billion or over 40% of total equity inflows. Despite pandemic-related challenges, core assets, such as built-up office properties, continued to draw interest from institutional investors. Site and land parcel acquisitions followed closely, with over $12 billion invested, representing around 39% of cumulative equity investments during 2018-22.
Anshuman Magazine, CBRE's Chairman & CEO for India, South-East Asia, Middle East & Africa, anticipates a steady flow of investments over the next two years, with an expected cumulative inflow of $16-17 billion. The office sector is predicted to maintain its appeal for institutional investments, followed by industrial and logistics (I&L) and site or land parcels.
Emerging asset classes, including warehousing, data centres, and co-living spaces, have seen increased interest from foreign investors. These segments are expected to benefit from rapid urbanization, growth in e-commerce, and evolving consumer demands. The government's initiatives to streamline regulations and encourage foreign direct investments (FDI) have played a significant role in attracting capital to these sectors.
The report also revealed that over 6,800 acres of land were acquired between 2018 and 2022, with 60% of the acquisitions occurring since January 2021. The residential market accounted for over 37% of the acquired land since 2018, and developers have ramped up acquisitions for residential projects, with 43% of total land acquisitions in 2022.
When it comes to geographical distribution, Delhi-NCR led the land acquisition activity by capturing over a one-fourth share of the total land acquired during the 2018-22 period. It was followed by Hyderabad and Mumbai, with each city accounting for approximately 14% of the land acquisitions.
In conclusion, the significant foreign investments in the Indian real estate sector between 2018 and 2022 demonstrate the market's potential for growth and continued attraction for institutional investors. With emerging asset classes, supportive government policies, and the resilience of the Indian real estate market, there is optimism for a steady flow of investments and strong growth in the coming years. The office sector is expected to remain a focal point for investment, while other sectors like residential, warehousing, and data centres continue to gain traction.
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