Real estate sector has received an equity capital of $32 billion during the last five years and is expected to attract $12-13 billion during 2023-24 with office assets likely to garner maximum fund, according to CBRE. Real estate consultant CBRE has estimated that equity flows in real estate sector will remain steady with expected investment at around $12-13 billion over the next two years with an average $6-7 billion flow per year.
Equity investments include those by private equity funds, pension funds, sovereign wealth funds, institutional investors, real estate developers, investment banks, corporate groups, and REITs, etc. CBRE expects that office assets would continue to garner a majority share of total institutional inflows, followed by Industrial & Logistics (I&L) and sites/land parcels. In addition, alternative investments, particularly in data centres, may take off.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, "India's strong underlying economic and demographic fundamentals, coupled with the evolving global trade landscape across sectors, builds a strong case for higher investments in real estate in 2023."
"China+1 strategy being adopted by many global corporates to de-risk supply chain requirements and mitigate production challenges is expected to benefit India. This would lead India to capture an increased market share in the global supply chain over the next 5-6 years," he added.
This would trigger the economy to grow at a higher CAGR, outpacing the world average and making India one of the attractive real estate investment destinations, Magazine said. During the next two years, in terms of locations mainly metros and tier-1 cities are likely to continue to be the major recipients of equity inflows.
According to CBRE data, the equity flow in real estate stood at $5.9 billion in 2018, $6.4 billion in 2019, $6 billion in 2020, $5.9 billion in 2021 and $7.8 billion in 2022. During the 2018-22 period, Mumbai followed by Delhi-NCR and Bengaluru dominated cumulative investments accounting for 63 per cent share since 2018. This translates to about $20 billion worth of equity capital deployed across these cities out of $32 billion equity flows in the last five years.
The office assets sector has attracted investments worth nearly $13 billion, accounting for over 40 per cent of the total inflows (2018-22 period). This was closely followed by over $12 billion deployed in the acquisition of sites/land parcels, fetching about 39 per cent share in cumulative investments.