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India Canada row: Canadian investments in India's real estate sector intact, says expert
Institutional investors from Canada, along with its various partners, have invested close to $9 billion into Indian real estate, said an expert
Institutional investors from Canada, along with its various partners, have invested close to $9 billion into Indian real estate and the current diplomatic row is unlikely to have any adverse impact on existing investments, said Aashiesh Agarwaal, senior vice president, Investment Advisory, ANAROCK Capital.
“While the current political situation between India and Canada is concerning, we believe it is essential to focus on the long-term fundamentals that drive investment decisions. The Indian real estate market remains fundamentally strong, supported by a growing economy, urbanization, and increasing demand for housing and commercial spaces,” he told HT.com.
“We do not anticipate any adverse impact on existing investments due to recent events. Investors recognize India’s potential as a key market and are likely to continue to engage positively, given the long-term benefits of investing in this dynamic economy,” he added.
According to media reports, despite rising diplomatic tensions between India and Canada, Canadian pension funds have so far remained committed to investing in India. The primary sectors attracting Canadian pension funds include infrastructure, renewable energy, technology, and financial services.
According to the National Investment Promotion & Facilitation Agency (Invest India), Canada ranks as the 18th-largest foreign investor in India, with cumulative investments totalling $3.31 billion from 2020-21 to 2022-23. Canadian investments account for 0.5% of India’s total foreign direct investment (FDI), with services and infrastructure comprising 41% of these inflows.
According to a report titled ' Canadian Pension Fund Investments in the Asia Pacific.' From 2013 to 2023, approximately 57% of Canadian investments in India focused on real estate, financial services, and industrial transportation. Infrastructure and renewable energy sectors have gained ground.
Also Read: Canadian pension funds stick to India amid row
Overall private equity investments in the real estate sector
According to a report by Anarock, the overall private equity investments in the Indian real estate sector declined 4% to $2.3 billion in the first half of this fiscal year due to lower inflow in office assets. It noted that the total number of deals declined to 17 in April-September this year from 24 in the corresponding period of the preceding year.
During the period, industrial and logistics assets attracted 67% of the total investments, significantly surpassing both the office and residential sectors (which attracted 17% each).
While private equity investments in the office sector declined by 79%, the industrial and logistics sector saw a substantial 378% increase in investments compared to the same period in the previous financial year.
Also Read: Equity investments in real estate sector increase by 46% to touch $8.9 billion in January-September 2024
Total equity investments in the real estate sector during Jan-Sep 2024 touched $8.9 bn, up by 46% Y-o-Y. Mumbai, Bengaluru, and Chennai accounted for a 66% share of investments in the Jul-Sep 2024 quarter, according to CBRE’s report titled ‘India Market Monitor Q3 2024 - Investments’.
Mumbai led the equity investment activity in Jul-Sep ‘24, along with Bengaluru and Chennai. Together, these three cities accounted for over 66% of total investments during this period, the report noted. During July-Sept’24, land/development sites dominated investments with a share of 45%, followed by the office sector with a 24% share. The retail sector experienced a resurgence in capital inflows, capturing around 22% share in the same quarter, the report showed.
