Investments in real estate reach $2.6 bn in H1 2022; office sector leads with 48% share: Colliers India

Institutional investments in the real estate market went up to $2.6 billion during January-June 2022, an on-year rise of 14 per cent from H1 2021. Investment inflows were led by office sector which accounted for a whopping 48 per cent, according to a recent report by the professional services and investment management company Colliers India.

Office sector led on the investment inflows front on the back of large technology companies continuing to lap up office spaces. Moreover, as per the report, investors too are taking a long view of the sector and binding assets into REITs.

For H1 2022, the retail sector followed up with a 19 per cent share of investment inflows on account of expansion of fashion and F&B brands, completed malls becoming investment avenues, and pickup in footfalls in malls. Investments into the alternate assets went up 53 per cent on-year to $370 million in the same period as investors looked to diversify their portfolios as deals during the period included data centers, holiday homes and life sciences.

“Moreover, there is untapped potential in India’s alternate assets which investors are looking for from a diversification perspective. During H1 2022, inflows in alternate assets accounted for 14 per cent of total investments. The next few quarters will see some greenfield investments, especially in the office and industrial & logistics sector,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Industrial and logistics sector and residential sector, on the other hand, saw subdued inflows during the first half of 2022. Talking of on-year change in investment growth, the report further stated that investments in the office sector went up by 20 per cent while retail sector saw a whopping 537 per cent rise in investments year-on-year, the study pointed out.

“The first half of 2022 has witnessed euphoria of businesses bouncing back with increased office and industrial leasing, retail and travel spend, and continued buoyancy in the residential sector. However, the market is seeing some caution on account of geopolitical tensions and increased expected risk-adjusted returns,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.

Talking of investment hubs, Delhi-NCR continues to lead the pack with highest inflows of 35 per cent, followed by Mumbai with 11 per cent share and Chennai with 10 per cent share. Multi-city deals continue to remain highly preferred among investors with 43 per cent investments during the first half of 2022.

Domestic players are also back with a bang as domestic investments into the real estate market comprise 38 per cent market share in H1 2022, a jump from 13 per cent in the same period last year. Domestic investors inclined towards mixed-use assets and retail sector, the Colliers India report noted.