Institutional investment in real estate in June quarter jumps 9-fold to $1.35bn: JLL India

Institutional investment in real estate jumped nearly 9-fold during the April-June quarter to USD 1.35 billion, mainly driven by the inflow of funds in the warehousing projects, according to property consultant JLL India.

In its 'Capital Markets Update Q2 2021', JLL India reported that institutional investors deployed USD 1,357 million in real estate during the second quarter of the 2022 calendar year as against a mere USD 155 million in the year-ago period. The warehousing segment attracted the maximum investment of $743 million during the April-June quarter this year as compared to USD 41 million in the corresponding period of the previous year.

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Investment in retail real estate stood at USD 278 million during the second quarter of this calendar year as against nil inflow in the year-ago period. The office market, which has been attracting huge investments even after the COVID pandemic, saw an inflow of USD 231 million in Q2, 2021, up from USD 66 million in the same quarter last year.

Institutional investment in the residential segment rose to USD 106 million from USD 48 million during the period under review.

According to JLL, the pace and volume of investments over the past decade have been supported by the introduction of Real Estate Investment Trusts (REITs) in 2014, the Real estate Regulation and Development Act in 2016 (RERA), Benami Transactions (Prohibition) Act and progressive relaxation in foreign direct investment norms over the years.

Radha Dhir, Chief Executive Officer and Country Head, India, JLL, said the first six months of 2021 saw investments of USD 2.7 billion, which is 53 per cent of the total investments seen in 2020, despite the second wave of COVID hitting India in April this year.

"Investors are showing resilience and are adapting to the uncertain environment. Relaxing lockdowns during the first three months of 2021 also gave investors a first-hand experience of the post-pandemic world. This led to risk re-rating and asset allocations witnessed a subsequent change in Q2 2021," she said.

Although the economic dent created by the second wave will lead to slower growth in 2021, investments in real estate are expected to maintain momentum, Dhir said.

"From where we stand, institutional investors have passed the litmus test of resilience during pandemic resurgence and are expected to commit more capital in 2021," she added.

During the first six months of the 2021 calendar year, the institutional investment in real estate rose to USD 2,688 million from USD 918 million in the corresponding period of the previous year.

Investment in the office segment rose to USD 1,344 million from USD 571 million, while inflow in warehousing increased to USD 772 million from USD 94 million. The housing segment attracted USD 295 million funds during January-June this year, up from USD 122 million in the same period of 2020. Retail real estate got USD 278 million during the first half of this year from nil inflow in the year-ago period.

Investment in the hotel segment was nil as against USD 130 million in the first six months of 2020.