29 April 2021 /PRNewswire/ MUMBAI, India; — Institutional investments1 continued in momentum during the first quarter (January-March) of 2021, which recorded an increase in volumes of 21 percent to USD 922 million, reflecting a sustained investment stake in the Indian real estate market. Qatar for sale | Apartments for sale
Investments throughout the quarter have been driven by more fund activity and closed development agreements, supported further by external macroeconomic factors. However, the pandemic increase is expected to delay the investment pipeline in the second half of March 2021, says JLL.
"During the first quarter of 2021, the institutional dynamic of investment continued with a 21 percent increase in volume of USD 922 million, which showed sustainable investment interest in India's real estate market," said Dr. Samantak Das, Chief Economist and Head of Research & REIS (India), JLL. "The remarkable resilience of the office market and its trust in long-term growth led investors to pursue quality assets in the core and development phases. The maturing REIT market is also an alternative to other asset classes that lacked income stability, "He added that.
Space for commercial offices drives the momentum of investment
Dominated business office assets represent USD 864 million transacted, representing 94% of the first-quarter value. Office space developers liquidated their portfolios in the next phase of expansion to deleverage or raise growth capital. Investors are currently actively exploring warehouse assets and deals are likely to be concluded in the next quarters. In the meantime, the housing sector continues to receive last-mile funding for project completion.
Hyderabad is leading 42% investment, followed by Mumbai at 21%.
With the launch of new Phoenix Group developments Hyderabad saw the highest capital flows of USD 384 million, representing a 42 per cent investment share in the first quarter of 2021. Mumbai accounted for 21% of investments with 193 million dollars deployed in its offices and residential segments, backed up by the stamp duty reduction established by the Maharashtra State Government.
Institutional investments to boost REIT market growth in India
India was also placed on the radar of institutional investors by the successful debut of three REITs. The Brookfield India REIT issue of ~USD 521 million was successfully launched and eight times overwritten in February 2021, with the major anchor investors being the domestic mutual funds. As of 16 April 2021, the market capitalization of the REITs listed in India stood at USD 6.6 billion, or roughly 30 percent of the total market capitalization of Nifty Realty Index companies.
Looking for the future
Even if the new cases of Covid have reemerged in the nation, our present actions are expected to be guided by a speedy response to the pandemic and lessons from the past.
There are likely to be broad trends:
Investors are likely to continue to assess deals and finalize investment processes under conditions of relaxation
JLL believes that more REITs are listed in 2021, which will also affect investment momentum
In addition to space for commercial offices, the recovery in the housing sector is expected to attract funding, especially for last-stage projects
Residential sales in Q1 (January-March) 2021 were recovered to over 90% of the volumes seen in the top 7 cities in Q1 2020 (pre-Covid). Smart demand recovery is expected to improve investment prospects by 2021. Opportunities to finance construction and last miles would be available
New data center operators and expansion plans of the major infrastructure-supported players and PE funds are expected to lead to agreements
Platform deals in the logistics sector are likely to remain active, since the industry has benefited from increased e-commerce demand and pandemic demand for pharmaceutical cold storage facilities
Despite the pandemic, institutional investments remained on a firm wicket in 2020 and are expected to increase further in 2021.