Indian Real Estate: NCR accounted for maximum share of real estate investments in H2 2022: Report

NCR accounted for the maximum amount of real estate investments in H2 2022, attracting 21% share of the total investment, according to Vestian report ‘Institutional Investment in Indian Real Estate: H1 2022’.

While a major share of the investment was committed towards the commercial sector, several deals were inked in the residential segment as well.

Mumbai, the financial hub of the country, stood in the second place with a share of 16% in H1 2022 as against 33% in H1 2021.

Bengaluru, being the country’s foremost office market, remained in the third place. Majority of the investment committed was towards the commercial segment followed by the residential segment.

Further, Chennai accounted for 7% share of the total investment in H1 2022, whereas Hyderabad and Pune did not record any individual investment in the first half of the year.

Other Tier II cities also had a share of 7% in the investment split in H1 2022. Cities such as Chandigarh, Lucknow, Ludhiana, Becharaji and Zirakpur witnessed marked investor interest during the first half of the year.

While the global concerns about the Omicron wave have subsided now, H1 2022 maintained relative cautiousness with institutional investors opting to wait it out till the tumult brought forth by the multiple waves receded.

The period, remained realistic and saw several important deals being inked noticeably in commercial, residential and life sciences sectors. The continued traction in institutional investment in real estate during the period implies that investors’ confidence has remained fairly consistent despite the economic slowdown, inflationary pressure and the continuing pandemic.

Despite the apprehension around the future of the real estate sector in the wake of the economic turmoil, sectors such as commercial and residential assets have continued to hold favorable investment prospects in H1 2022.

With the rise in the return to the office and a robust supply in the pipeline in the forthcoming period, the sector is expected to witness a better demand than in the previous pandemic-affected years, thereby opening increased investment opportunities.

Customers being willing to come out and shop and socialise, the retail sector is also reviving with renewed vigor across India.

Meanwhile, encouraged by the fair performance of the operational REITs in spite of the pandemic, and the strengthening of portfolios across varied asset classes, structural themes of REITs are expected to emerge, and we expect more retail, warehousing, and hospitality assets as part of REIT offerings in the forthcoming period.

Investors increased their exposure to the emerging asset classes such as data centers and life sciences in the first half of the year.

Institutional investment during H1 2022 was recorded at USD 2.3 billion as opposed to USD 3.2 billion of investment observed in H1 2021, depicting a decline of 28% when compared to the amount in H1 2021.

Repeated waves of the pandemic, coupled with increasing inflation and the uncertainty caused by global headwinds, created a greater impact on the Indian market, thus leading to a cautious approach adopted by investors in Indian real estate market.

Interestingly, despite the significantly reduced amount of investment in the sector, the average deal size in H1 2022 was recorded at USD 118 million, depicting an increase of 14% when compared to the average deal size in H1 2021.

Foreign funds accounted for a lion’s share of 84% in H1 2022, signifying the increased interest of foreign investors owing to ease of doing business and various other reformatory changes in the country in recent times.

Multi-city deals occupied the top rank in institutional investment, its share increasing to 36% in H1 2022 from 30% in H1 2021, while on individual cities basis, NCR accounted for the maximum amount of real estate investment in H2 2022, attracting 21. % share of the total investment.

Institutional investment in the second quarter of 2022 was recorded USD 1.3 billion, depicting a 9% decline when compared with the amount of investment in the year-ago period of Q2 2021, attributable primarily to the economy slowing down in the country and the global headwinds. from geopolitical conditions creating an uncertain environment.

As with the half yearly trend, majority of the investment during Q2 2022, to the tune of 86%, came from foreign funds, while domestic investors’ share was restrained to 14%.

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