Investments from America in Indian real estate fall 39% to USD 1.35 billion last year: JLL

Investments from American institutions in Indian real estate market declined 39 per cent last year to USD 1.35 billion amid global uncertainties, according to JLL India.

During 2022, US-based institutional investors had pumped USD 2.2 billion in Indian real estate. American funds have generally been the biggest investors in Indian real estate market.

According to the JLL India report released on Monday, the total institutional investments in Indian real estate rose 14 per cent to USD 5,878 million (USD 5.87 billion) in 2023 from USD 5,151 million in the previous year.

The consultant said this reflected India's resilience in the face of global economic headwinds. JLL anticipates investor confidence in the Indian growth story to continue in 2024 as well.

In 2023, the largest contributors were foreign institutional investors with 63 per cent share in the total investments. However, the share of inflow from Americas, the conventionally highest contributor in investments, witnessed a significant dip of 23 per cent from 43 per cent in 2022.

Indian real estate market witnessed a significant increase in investments from domestic domiciled investors' 37 per cent compared to an average of 19 per cent in the previous 5 years. Equity continued to dominate investments in real estate at 81 per cent share of the total investments.

The office sector continued to lead by a huge margin, at 52 per cent share in the investment pie, followed by residential and warehousing at 16 per cent and 13 per cent, respectively.

Capital flow in the office sector witnessed an increase of 61 per cent from USD 1.8 billion in 2022 to USD 3 billion across 15 deals in 2023.

"Inflation and uncertainty about the direction of the global economy did not seem to be a deterrent for institutional investments in India in 2023," said Lata Pillai, Senior Managing Director & Head of Capital Markets, JLL India.

Multiple rate hikes in the Americas have curbed investment activities from the US and Canada, Pillai pointed out. "However, 2023 saw a significant contribution from the APAC region," she said. Pillai expected this optimistic trend to continue in 2024.

"While the upcoming elections may cause delays in decision-making, the India growth story will continue to be robust, driven by its inherent strengths and continued focus on economic development," Pillai said.

Apart from institutional investments, JLL India said the year 2023 witnessed the announcement of USD 2.8 billion of platform commitments to be invested over the next few years.

There was a significant dip (38 per cent) in platform commitments as compared to 2022, it added.