Delhi, Bengaluru outpace Mumbai in global real-estate investment inflows: report

Institutional investments in Indian real estate reached $1.7bn in Q1 2023, with the office sector accounting for 55% of inflows, according to a report by Colliers India. Global investors took a 76% share of investments, but domestic money in property grew fourfold YoY. The retail sector saw no investment, while mixed-use assets fell 80%. However, life sciences, senior housing and student accommodation all grew by almost 300%. Bengaluru and Delhi-NCR attracted one-third of the total investments, while Mumbai's share fell 86% YoY, with just a 2% share compared to Delhi-NCR's 23% and Bengaluru's 12%.

Mumbai: Institutional investments in real estate, at USD1.7 billion, remained strong during the first fiscal quarter (Q1) of 2023, with the office sector accounting for 55 percent of the total inflows. The residential sector also witnessed a sharp rise in inflows, said a research report released by Colliers India on Sunday.

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While global investors dominated with 76 percent share of the total investments, investments from the domestic market also rose four times year-on-year and remained firmly committed towards residential assets, the report said. The institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, pension funds, private equity, foreign-funded non-banking financial companies and sovereign wealth funds.

The total investment inflows showed that the retail sector did not see any investment, while mixed-use assets combining office, residential and retail also witnessed an 80 percent dip. However, alternate assets like data centres, life sciences, senior citizen housing, holiday homes, and student housing witnessed a nearly 300 percent increase, and the investments in the residential sector witnessed explosive growth year on year.

The report gave an insight into how the investment inflows have changed year-on-year with more investments flowing to Bengaluru and Delhi-NCR compared to Mumbai. Delhi-NCR and Bengaluru attracted one-third of the total investments during the fiscal quarter, led by the increased activity in these markets. However, the majority of the inflows (63%) were through multi-city deals, and Mumbai had just two percent share compared to Delhi-NCR’s 23 percent share and Bengaluru’s 12 percent. The Q1 data of 2022 shows that Mumbai’s share was much higher last year and dipped by 86 percent this year.

“The Indian real estate investment cycle is now transitioning into a phase of witnessing secondary market transactions and may see more institutional owners partially or fully divesting portfolios,” said Piyush Gupta, managing director, capital markets and investment services at Colliers India. “In the coming quarters, we shall see some large quality assets traded in office and select logistics assets. The preference for India in developing Asia Pacific markets is getting stronger.”