Real Estate

‘Institutional investments in real estate is more broad-based in 2021’

Abishek Law | | Updated on: Dec 21, 2021
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Institutional investments in real estate sector for calendar year 2021 is expected to be around $4 billion – 30-40 per cent lower than pre-Covid years and 2020.

However, markets are expecting a rebound in 2022 with deals being back to pre-Covid levels. Listing of REITs, distressed opportunities, asset diversification, and high growth in data centre and logistics segments will drive the investment momentum in 2022, apart from investment in office spaces.

So far in 2021 (from January to September/October) institutional investments have been to the tune of $3.2 billion spanning 31 deals across asset classes that include warehousing, office spaces, residential projects and data centres; as against $5 billion- $5.9 billion, between the years 2017 and 2020.

“The year (2021) has witnessed more broad-based recovery. There were 31 deals during the first nine months as against 19 deals during the same period of 2020,” an analyst told BusinessLine .

Big deals of 2021

The largest deal in 2021, so far, has been by Blackstone Real Estate, which acquired Embassy Industrial Parks from Warburg Pincus Inc and Embassy Group for an enterprise value of over $700 million.

Other major fund providers that have made investments this year include CPPIB, Ascendas, Tata Realty, Equinix, Varde Partners, GIC Singapore, M3M India, Bain Capital, DCCDL (a GIC – DLF JV), CPDQ, PAG, among others.

Sector recovery

A research report by property consultant, JLL says 2022 is expected to see institutional investment in real estate cross $5 billion.

The office market also showed signs of recovery. The net absorption for Q3 2021 at 5.9 million sq ft, was the highest in the year to date. Given the transaction activity recorded so far in Q4, the last quarter is expected to be the strongest, Radha Dhir, CEO and Country Head, JLL India, said in a report.

Office real estate markets are expected to record 30-35 per cent annual growth in 2022 because of growing traction for the tech industry.

JLL also anticipates the Indian Data Centre industry to add a record high 277 MW capacity in 2022, requiring 3.2 mn sq ft of real estate space. As of H1 2021, it stands at 499 MW.

On residential sales front, it expects a 20 – 25 per cent growth in sales. If prevailing economic conditions remain positive and the pandemic does not cause any major derailment, the average quarterly sales by end of 2022 could increase to 2016-pre-demonetisation numbers of about 39,891 units

In 2021, so far, more than 77,000 residential units were sold, up 47 per cent Y-o-Y (on a 9-month-basis). New launches were around 93,000 units, up 38 per cent.

Published on December 21, 2021

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