Foreign fund inflows into India's real estate market increased by 137% between 2011-13 and 2014-16 with the US, Canada and Singapore leading the pack of overseas investors, according to a report by Knight Frank.
Foreign investments in Indian realty surged to $7.6 billion during 2014-16 from $3.2 billion during 2011-13.
The US held the largest share of foreign investor inflows at over 40%, followed by Canada at 18% and Singapore at 17%. From Canada, pension funds have had the larger pie in India since 2015.
The Capital Active report by Knight Frank released on Thursday also states that office spaces and retail were the hot favourites for foreign investors last year. A look at segment-wise analysis for investments in 2016 shows that these two segments accounted for 72% of the investments.
Moreover, inflows from domestic investors were equally healthy. From $1.3 billion, they almost doubled to $2.4 billion during the same period.
In cities, Mumbai got the largest share of overseas investments last year at 39%, followed by rest of India (including Gurugram and Noida) that accounted for 32%. Bengaluru’s share stood at 11% followed by Chennai with 10% and Delhi with just 4%.
Samantak Das, chief economist and national director - research, Knight Frank India, said, “Investors in these countries are expecting diminishing inflation-adjusted returns. With the strengthening of domestic currency, they are finding assets in emerging markets cheaper from an investment perspective. India, among all other emerging markets, has attracted the highest interest of global investors on account of a stable government and implementation of path breaking reforms such as the goods and services tax that would formalise the economy.”
Secondly, the Indian realty sector is also undergoing transformation due to the Real Estate (Regulation and Development) Act 2016, focus on affordable housing and the nod for real estate investments trusts.
Since 2011, foreign investors were betting on office spaces, with no capital flow towards retail, however, since last year retail too has become an attractive investment destination for foreign investors.
“As economic performance and currencies shift, we expect to see more focus on emerging markets from both global and local players. This should lead to a move towards more opportunistic capital chasing markets such as India, China and parts of Central and Eastern Europe,” read the report.
NEW HEIGHTS
- Foreign investments in India’s real estate were at $7.6 billion during 2014-16
- US held the largest share of foreign investor inflows at over 40%
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