Investment by institutions in real estate rose by a fifth in calendar 2022 to $4.9 billion in calendar 2022, led by alternative assets and office property, data from property consultant Colliers showed.
The asset consultant, however, warned that there could be a moratorium in deployment of funds in the current year due to the slowdown in major economies such as the United States and Europe.
While the office segment received 41 per cent of the total inflows last year, around 18 per cent was in alternative assets such as data centers and hospitals, which are seen as emerging sectors. Investments in alternative assets nearly doubled annually to less than $1 billion.
“The growth of alternative sectors is led by investors looking to diversify their portfolios, with some traditional asset classes offering stable returns,” Colliers said.
Data centers are becoming big business in India, driven by government initiatives on data localisation, companies offering more cloud services and the explosion of online content. While existing players such as Amazon Web Services and Google Cloud are growing rapidly in India, domestic entrants such as Ambani and Adani have also made substantial investments in the segment.
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Of the total amount flowing into alternative assets, data centers accounted for more than half, followed by others such as holiday homes, hospitals and life sciences.
The office segment, which is a perennial favorite with foreign private equity giants such as Blackstone and Brookfield, saw institutional inflows rise 50 per cent to nearly $2 billion, led by large deals.
Colliers said investors are building a portfolio that could be bundled as a real estate investment trust, while greenfield and ready-to-move-in assets are also seeing traction.
“The majority of deals in the office sector were driven by global investors looking at income-generating properties,” Colliers said.
However, the year saw a decline in inflows into the warehousing and residential segments, although there were some large transactions in these segments.
Colliers said investment in the real estate sector is likely to increase due to ‘structural changes in capital demand’.
Piyush Gupta, managing director, capital markets and investment services, Colliers India, said, “Performance credits, special situations, portfolio acquisitions, asset reconstruction and related structures are on the rise and are likely to attract more investments.”