Institutional investors continue to pose faith in Indian realty, invests USD 2.9 billion across 22 deals in H1 2023: JLL
Institutional investors continued to pose faith in the Indian real estate sector
H1 2023 witnessed a significant increase in domestic capital to 44% share of the total investment compared to 18% in 2022
Office sector remained the most favoured sector with a major share of 66%
Residential sector attracted investment of USD512 mn across nine deals in H1 2023
Warehousing attracted investment of USD366 mn i.e.80% higher than H1 2022
USD2,792 mn of platform commitment announced across 4 deals in H1 2023 to be invested in the next few years
National, June 27, 2023: Institutional investors have continued to pose faith in the Indian real estate sector despite the global headwinds including uncertainty over economic growth and geopolitical tensions. The rise in investment inflow is an indication of the growth opportunities as India continues to emerge as a bright spot among international markets.
According to JLL, India’s premier and largest professional services firm specialising in real estate, the country’s property sector has attracted over USD2.9 bn*/USD 2939 mn* worth of investments across 22 deals during H1 2023. Average deal size of investments increased by 17% to USD 134 mn compared to USD 115 mn, an aggregate of the year 2022. The Q1 attracted investment of USD 1330.7 mn which scaled up to USD 1539.3 mn in Q2. Investment pattern continues to be robust and expected to cross USD 5 bn in CY 2023.
Marginal increase – USD 2.9 bn in H1 2023 compared to USD 2.8 bn in H1 2022
Note: Platform fund commitments have not been included in the total investment volumes and have been analysed separately
H1 2023 witnessed a significant increase in the domestic capital to 44% of the total investment, compared to 18% in 2022 with the highest contribution of domestic capital in the last five years. Largest amount of investment has come from APAC region with 74% share of the total foreign investments, remainder was by Americas.
Significant increase in the share of domestic capital
The last few years have witnessed an increasing trend of portfolio-level investments compared to individual assets. This has led to an aggregation of assets across cities, with multi-cities accounting for 67% share of the investment pie.
| City | Multi-city | Delhi NCR | MMR | Bengaluru | Pune | Chennai | Hyderabad |
|---|---|---|---|---|---|---|---|
| Investment (in USD) mn) | 1928.4 | 296.6 | 229.5 | 222.5 | 153.7 | 85.4 | 23.0 |
Office sector remained the most favoured sector with a major share of 66% followed by residential and warehousing at 17% and 12%, respectively. The office market showcased resilience in the last 2 years and are seeking ways to seamlessly weave hybrid mode of working through flex spaces. Multi-city assets (top seven cities) accounted for the highest share of investments at 81% followed by Bangalore at 10%.
Residential sector attracted investment of USD 512 mn across 9 deals in H1 2023. An increase by 19% compared to H1 2022 and by 56% compared to H1 2021. NCR led the share in the investment pie at 44% followed closely by MMR at 39%. 56% of investments in the residential sector was received via domestic players. Additionally, the sector witnessed a commitment of USD 622 mn through platform deals.
H1 2023 investment volumes in warehousing stood at USD 366 mn– 80% higher than the same period of 2022. Foreign funding constituted 70% of the investment volumes given that the outlook for warehousing remains bullish led by accelerating manufacturing investments, aggressive expansion of e-commerce and the growth of third-party logistics (3PL) companies. Investments are not restricted to Tier 1 cities – but spread across Tier 2 and 3 cities which are now emerging as major consumption and e-commerce hubs.
With COVID restrictions lifted across the world, Hospitality sector is back on the investors’ radar with 5% share in H1 2023. The total investment volumes stood at USD 133.8 mn.
“Investor confidence in Indian real estate is increasing steadily. Despite the looming fear of recession in the US economy and global headwinds, H1 2023 clocked investments close to USD 3 bn, about 2% higher than the same period last year. This reflects the confidence of investors in the sector's growth prospects and investor community's confidence on Indian real estate.
The office sector witnessed robust investments close to USD 2 bn with numbers surpassing the CY 2023 office sector numbers. The last few years have witnessed core assets changing hands between investors which is an indication of a maturing market. Another big development this year has been the launch of India’s first retail REIT. The number and spread of the domestic investors have been extremely healthy for this initial public offer.”said Lata Pillai, Senior Managing Director and Head, Capital Markets, India, JLL.
Platform commitments
According to the report by JLL, USD 2792 mn of platform commitment announced across 4 deals in H1 2023 to be invested in the next few years. CY 2022 saw the highest growth of platform deals,174% increase from 2021 and 36% increase from pre covid year of 2019. H1 2023 has already witnessed 62% of the total platform commitments announced in CY 2022, an indication of increasing confidence in the Indian real estate market.
Increasing trend of average commitment amount in the last few years – H1 2023 has seen a growth of 7% than CY 2022 and a 45% growth in the average commitments of the last 5 years average. Office sector continued to be the preferred sector at 67% of the total commitments announced, followed by residential at 22% and Data center at 11%. Going forward, data centre demand is expected to significantly increase, driven by rapidly growing data consumption, the digitization of the economy, the onset of 5G and data localisation trends.
H1 2023 already at 62% of the total commitments announced in 2022
Increasing trend of average commitment amount | At 67% office sector continues to be the favoured sector
About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
JLL is India’s premier and largest professional services firm specializing in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of over 12,500 professionals.
The Firm provides investors, developers, local corporates and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visit jll.co.in