The various measures taken by the government have been able to attract higher capital inflows. Capital flows into Indian property market has been 10 times higher than the outflows in 2017. It recorded $2.6 billion of inflow compared to outbound capital flows to the tune of $0.26 billion during the year, showed data from Knight Frank.
The changes in business environment brought by landmark reforms like Goods & Services Tax implementation, demonetization and Real Estate (Regulation & Development) Act 2016 (RERA) besides others; coupled with government impetus for housing and an imminent possibility for Real Estate Investment Trusts (REITs) as an asset vehicle has improved the prospects of the Indian property market and ensured retaining investment commitments to the domestic market.
“The numbers indicate a certain shift in Indian realty’s potential as an attractive investment avenue not only from overseas institutional investors but also from domestic institutions perspective. Policy initiatives in addition to the demand led by favourable demographic is resulting in a robust combination attracting capital and putting India higher on these rankings,” said Shishir Baijal, CMD, Knight Frank India.
Institutional investors from United States, Canada and Singapore region collectively contributed to 84% of capital inflows to Indian property followed by United Kingdom, United Arab Emirates and Hong Kong.
Around 80% of the outbound capital flows from India found place in Austria, United States and Singapore collectively, while the balance of total 0.26 billion found way into United Kingdom and Portugal property market.
India ranks at 19th position amongst the 73 countries that attracted cross-border capital into their property markets in 2017. With $2.6 billion of cross-border capital inflows excluding development sites, India ranks ahead of its Asia Pacific regional counterparts like Malaysia, Thailand, Indonesia, Vietnam and Philippines, which collectively attracted lesser capital flows compared to India.
Owing to a battery of reforms, the attractiveness of Indian real estate potential has caught the fancy of international investors and developers alike resulting into this favourable investment account.
While the capital outflow from India has been volatile for a long period, between 2014 and 2017, the outflows subsided to $1.9 billion compared to $2.5 billion during 2010-2013. In the latest four year period, the inflows were over four times the outflows compared to the earlier four year period when they were just over 1 time.
According to Knight Frank’s report on active capital, the global real estate market is re-internationalising as reflected by 32% of all transactions in 2017 by volume involved cross-border purchases, up from 25% during 2009-2011. The year marked the first time since first tracking the markets in 2007 where Asia-Pacific has overtaken Europe and North America as the top source of cross-border capital outflows.