Indian realty got $5.2 bn institutional investment in 2022, up 19%: Study

Warehousing, data centres will attract institutional investments in 'years to come', says JLL

Indian real estate got $5.2 billion of institutional investments across 47 deals in the calendar year 2022 (CY22), a time of geopolitical headwinds and inflationary pressures. Investments increased 19 per cent compared to 2021, said a report on Tuesday.

The average transaction size in CY22 was $105 million--46 per cent higher than CY21, said the report by JLL, a real estate consultancy firm. The third quarter (Q3) of CY22 (July-September) witnessed investment volumes soften by 12 per cent compared to the corresponding period in CY21. However, in Q4, CY22 volumes soared 103 per cent.

Institutional investments include those by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign funded NBFCs and sovereign wealth funds. The office sector got 36 per cent share of such investments and residential 30 per cent in CY22.

Real estate investments were buoyant in 2022 and adapted to an uncertain environment. "We expect this optimistic trend to continue in the current year," said Lata Pillai, managing director and head, Capital Markets, India, JLL.

"Commercial continues to be the preferred sector this year too, however warehousing and data centres are the two sectors which we feel will also attract a major share of institutional investments in the years to come,” Pillai added.

The office sector continues to be the front runner for institutional investments, getting $1,860 million spread across seven deals. Bengaluru accounted for the highest share of such investments at 38 per cent.

The residential sector saw an annual rise of 45 per cent, attracting $1,564 million investments in CY22 compared to $1081 million in CY21.

The report said that in CY21, the top eight cities witnessed a 162 per cent year-on-year growth in institutional investments in the warehousing sector compared to the pre-pandemic year of 2019. This year has seen investments of $ 288 million through 6 deals and an additional commitment of $ 1875 million through platform deals.

“Private-equity investors are pushing the warehousing rents in India, as they expect an entry yield of 9 - 10 per cent instead of the current yield of around 7- 7.5 per cent,” it said.

JLL said data in the report was compiled as per available information in public domain.