Indian real estate is attracting new new set of foreign institutional investors even as pension funds and sovereign wealth funds from countries such as Canada, Netherlands, Qatar and Singapore increase their investments.
Foreign investors have consistently outpaced their domestic counterparts as far as the total annual investments into Indian real estate is cocerned and in the last couple of years this gap has widened further. Since 2016, foreign investors have invested close to $9 billion as against $2.1 billion invested by Indian investors.
In the recent times, foreign institutional investors from countries such Canada, Hong Kong, Netherlands and Qatar have gained prominence over traditional investors from Singapore and United States. Overall, these countries have gained around 24% additional market share.
“The strength of the Indian economy and favorable demographics, coupled with the introduction of several growth oriented reforms including Real Estate (Regulation and Development) Act, 2016; Real Estate Investment Trusts; Goods and Service Tax; relaxation of Foreign Direct Investment (FDI) norms etc. are aiding the real estate sector to attract higher investments,” Neeraj Bansal, Partner and Head, ASEAN Corridor, Building, Construction and Real Estate, KPMG in India.
The investment since 2016 by foreign funds has mostly been in commercial assets such as office space, warehouse and retail. However, investors from Hong Kong as well as Indian domestic institutions have have largely allocated capital towards residential projects. In the initial years, the investors seemed more interested in making investments in the metro cities but gradually they have started fanning out to non-metro cities as well.