According to a report published by Colliers India, institutional investments in alternate asset classes in real estate reached a record high of $0.9 billion, indicating a 92 percent YoY hike for the calendar year 2022. These investments accounted for 18 percent of the total inflow for the year and is said to have jumped 4-fold since 2019. Investors have bet on emerging markets such as data centres, life sciences, holiday homes, hospitals, etc. The largest tractions were witnessed in data centres which accounts for roughly 52 percent of the total investments made in alternate assets.
According to a report published by Colliers India, institutional investments in alternate asset classes in real estate reached a record high of $0.9 billion, indicating a 92 percent YoY hike for the calendar year 2022. These investments accounted for 18 percent of the total inflow for the year and is said to have jumped 4-fold since 2019. Investors have bet on emerging markets such as data centres, life sciences, holiday homes, hospitals, etc. The largest tractions were witnessed in data centres which accounts for roughly 52 percent of the total investments made in alternate assets.
Private equity and institutional investments into the real estate sector in India remained buoyant in 2022. Private equity investments touched $4.8 billion in 2022, indicating a 20 percent increase YoY. The inflow of investments into the office sector remained steady at 41 percent of the share of total inflow for the year. Greenfield and ready-to-move assets continue to be the top favourite. Majority of the deals conducted in 2022 in commercial real estate were undertaken by global investors looking for income-yielding assets.
Totally, investments made in the Indian real estate sector touched $4.9 billion in 2022, indicating a growth of 20% YoY. This being despite having an environment riddled with high interest rates, geo-political uncertainty, high inflation, and concerns of a global recession. While global investors have led with high participation via entity-led deals, domestic investors too are picking up pace. In 2022, domestic players continued bet on the residential market. The share of domestic inflows in 2022 surpassed 2021 by accounting for 21 percent of total inflows in the sector. However, domestic investment remains below pre-pandemic levels for now.
According to the Colliers report, gross yields were the highest for Grade A office spaces (ready and fully leased at 8-9 percent, followed by Grade A warehouses (ready and fully leased) at 7-8.5 percent and third with co-living and student housing at 6-7 percent. The retail sector witnessed gross yields of 5.5-7 percent, while the residential sectors delivered at 2-2.5 percent.
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