Foreign Investments in Indian Real Estate Tripled to $26.6 Billion in Six Years: Report 

India's real estate sector has witnessed a significant increase in foreign institutional inflows, with cumulative investments of $26.6 billion from 2017 to 2022, according to a report by Colliers International. This figure represents a threefold rise from the preceding six-year period, highlighting India's growing appeal to global investors. The report cites major structural and policy reforms that have brought transparency and ease of business operations as key factors driving foreign investments in India's real estate sector.

Office Sector Remains Most Popular, while Industrial Assets See Rise in Foreign Investments

The office sector remained the most popular section, constituting 40% of total investments during the 2017-22 period. Foreign investors are also showing increasing interest in alternative asset classes such as Global Capability Centers and Data Centers, as well as industrial assets, which constituted 87% of the total investments received in industrial and warehousing during the same period.

According to Sankey Prasad, chairman and managing director at Colliers India, "the strong economic and business fundamentals are enhancing institutional investors' sentiments and forging strategic partnerships to expand their portfolios." India has become a preferred investment destination in the Asia Pacific region due to its higher yields and relatively lower pricing points, with Bengaluru leading office yields and Mumbai leading industrial asset yields.

However, Colliers warns that the impact of economic headwinds may lead to a moderation of overall demand in certain sectors such as commercial office segment and affordable and mid-housing in 2023. Despite this, investors are expected to show a preference for Grade A, high-performing green assets with premium construction standards. Data centers are also expected to be a strong investment opportunity, while REITs are likely to expand to other asset classes such as retail and industrial, with the first retail REIT expected to enter the Indian market in 2023.

ThinkWithNiche News' conclusion

To summarize, India's real estate sector has seen a significant increase in foreign institutional investment, with a threefold rise to $26.6 billion in the last six years. The report by Colliers International highlights the structural and policy reforms that have led to increased transparency and ease of business operations in the industry, making India a preferred investment destination for global investors. The office sector continues to be the most popular investment area, with industrial assets also seeing a rise in foreign investments. The report predicts a shift towards high-performing green assets, investments in alternatives such as data centers, and the expansion of REITs to other asset classes in 2023. While some sectors may see a moderation in demand due to economic headwinds, the overall outlook for the Indian real estate market remains positive.