Foreign funds into Indian realty jump 3x between 2017-22: Colliers

Foreign institutional inflows into the Indian real estate sector stood at $26.6 billion between 2017-22, marking a three-fold rise compared to the preceding six year period, a new report by property consultancy Colliers revealed on Friday.

The feat comes on the back of landmark structural and policy reforms which propelled greater transparency and ease of doing business, the report noted. “India's favorable demographic indicators, deep digital talent pool, developmental government policies, infrastructure advancements and competitive costs have made it one of the top choices for global enterprises, fueling real estate demand in India,” said Sankey Prasad, chairman and managing director at Colliers India.

The office sector bagged the highest share in total foreign inflows during the said period at about 45%. “While investors remain buoyant on office assets, their interest in alternative assets is surging,” Prasad stressed.

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Data centres emerged as the most popular alternate asset class post the Covid-19 pandemic with a 12x surge in investments in 2020-22 compared to the 2017-19 period. India's data centre space footprint, which grew four-fold from 2.7 million square feet (msf) in 2017 to 10.3 msf in 2022, may reach 20 msf by 2025, the report estimated.

According to the report, foreign investments accounted for a sizeable share in total realty investments during 2017-22 at 81%, with the US alone accounting for a 42% share. The country saw its highest-ever total FDI inflows of $84.8 billion during 2021-22 on the back of investor-friendly FDI policies, improved transparency in deal structures and increased investment limits.

Indian cities like Bengaluru and Mumbai occupy the second and third positions, respectively, in terms of commercial yield across the APAC region, the report highlighted. While Bengaluru leads office yields in the region, Mumbai leads in industrial assets yield, it added.

Inflows during Q1 2023 rose 37% year-on-year, led by the office segment at a 55% share followed by the residential segment at 22%. “India is on a long-term structural upcycle over the next few years and opportunities galore across spectrum and asset classes in real estate,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.