Capital Markets Update: Q1 2021

Institutional investments continued the momentum during the first quarter of 2021. A 21% registered growth in volume at USD 922 million indicated sustained investor interest in India’s real estate market. In the secondary markets, the successful launch of the country’ third REIT, Brookfield India issue of ~USD 521 million, was oversubscribed by eight times during February 2021.

Investments during the quarter were broad-based as some funds in pause mode became active and closed development stage deals. The investments, moreover, were supported by positive sentiments created by the macro-economic recovery and the start of the COVID-19 vaccination process. However, the pandemic surge during the second half of March 2021 is expected to delay the investment pipeline.

Rising institutional interest in domestic REIT market

Mutual funds form one of the major investment institutions globally. Investments managed by the Indian mutual fund industry, commonly known as assets under management, stood at USD 430.27 billion as of March 31, 2021, as per the Association of Mutual Funds in India. Mutual funds were allowed to invest in listed REITs from 2017. The listed REITs have provided an alternative to other asset classes, which lacked income stability. This increasing participation by mutual funds is expected to provide the required liquidity and attract more REITs for listing.

JLL believes that India’s current office market across its seven major cities has a potential space of 284 million sq ft that could be securitized with an estimated value of USD 36 billion.

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