Share of domestic investors in real estate market is rising: Colliers

• In India, investment in the office sector accounted for almost half of the total investments in the real estate sector.
  
• The report predicts that the office leasing activity could remain muted in the fourth quarter.
  
• A similar trend was seen in the residential sector and warehousing/logistics segments which witnessed a buoyant demand and a steady rise in absorption rates.

Despite losing some momentum due to rising interest rates and high inflation, the Indian real estate market has performed well in the third quarter, said a report by Colliers. For the nine month period between January-September 2022, investments in Indian real estate touched $3.6 billion, registering a hike of 18% y-o-y.

“The capital inflows in Indian real estate continue to flow in, as long term sustainable growth story remains intact. Further, trend in residential sales is reflective of positive long term structural change in the sector. Investments in India are getting more broad based with increased participation from domestic investors,” said Piyush Gupta, managing director, Capital Markets and Investment Services, Colliers India.

Gupta also said that newer avenues are evolving like fractional ownership, alternate investment funds (AIFs), and pooled investment structures are providing depth to both investors and developers.

As per the report, domestic investors accounted for about 18% of the investments between January-September 2022, rising from 14% share last year. “At the same time global investors continue to dominate funding activity with higher participation in entity-led deals. However, global investors are on a wait-and-watch mode until recessionary pressures persist,” said Vimal Nadar, senior director, Research, Colliers India.

Investments in the commercial office sector saw a 53% year-on-year growth, according to the Asia Pacific Market Snapshot | Q3 2022 report. Investment in the office sector accounted for almost half of the total investments in the real estate sector.

In 2022, office leasing is likely to cross 50 million sq feet across the top six cities, surpassing the highs seen in 2019, said the report.

However, the report predicts that the office leasing activity could remain muted in the fourth quarter (Q4) over apprehensions of a global recession but the adoption of technology in the workspace will drive innovation and demand in the future.

Warehousing and logistics segments too witnessed a buoyant demand and a steady rise in absorption rates. In the residential sector, this was mostly seen due to lower interest rates and the offers during the festive season.

Colliers believes that industrial and logistic spaces will likely remain in favour following the announcement of as much as $20 billion in investments in the country’s manufacturing sector.

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