Institutional investment in real estate likely to fall 20% in 2021

Institutional investments in real estate may fall 20 per cent to $4 billion during this calendar year because of a higher inflow of funds in 2020, according to property consultant JLL India.

During the January-September period, the institutional investment rose to $2,977 million from $1,534 million in the year-ago period.

"Unless some large portfolio deals are not inked at the end of the year, annual investments are expected to be in the $3.8-4 billion range in 2021," JLL said in a statement.

Institutional investments managed to cross the $5 billion mark in 2020 due to large portfolio deals worth $3.2 billion during the last quarter of the year.

"However, 2021 witnessed more broad-based recovery with 31 deals during the first nine months as against 19 deals during the same period of 2020," it noted.

On the outlook for the next year, JLL India expects investments to cross $5 billion mark, which was witnessed by the Indian real estate annually during the 2017-2020 period.

The institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign-funded NBFCs and sovereign wealth funds.

It also includes anchor investors in REITs.

"Investors, apart from the office sector, also allocated fresh capital in the residential segment, which staged a smart recovery, while warehousing and data centres continued to attract investments," JLL India said.

The retail sector witnessed capital commitments through investment platforms that remain bullish on its growth prospects, it added.

Radha Dhir, CEO and country head, India, JLL, said, "The performance of institutional investments in the Indian real estate during 2021 can be summed up in one theme – 'increasing immunity to uncertainty'."

The Indian economy is expected to gain further strength and broad-based investment growth on the back of a low-interest environment, continued monetary stimulus, improving revenue visibility across asset classes, and inclusive growth policy, she added.

Listing of REITs, distressed opportunities, asset diversification, high growth data centre, and logistics segments will drive the investment momentum in 2022, Dhir said.