The industrial and logistics sector was the most sought-after, and investments rose to a five-year high of $1.1 billion, a five-fold increase from 2020.
The sector has been drawing strong operator and investor interest due to increased demand from e-commerce and 3PL players post-pandemic.
This growth momentum is likely to continue in 2022, as major global investors and developers continue to expand their footprint in proximity to high consumption areas across Tier I and II cities, said Colliers.
“The pandemic has accelerated several structural trends and will have lasting changes on the nature of real estate business in India. The Investments across asset classes saw promising inflows in 2021, reflecting several opportunities for investors to recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the residential, increasing development of data centres, alternatives, industrial, office, and the evolution of the life science sector. There is a reflection of confidence in the industry to participate in the growth story and hence develop, build and own real assets in the long term.” said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.
Overall the real estate institutional investment volumes closed at $4 billion in 2021, a 17% dip yoy. However, capital flows came on a broad-based recovery across most asset classes, geographies and doubled in the number of deals compared to 2020, mentioned the report.
The industrial and warehousing sector accounted for half of 2021 investment, while the office sector attracted the highest investments at $1.2 billion, accounting for 31% of the total investments in 2021. This reaffirms the resilience and the long-term growth story of the sector.
“The year 2021 has seen a strong investor appetite for residential and industrial & logistics sectors while office continues to be dominant. The broad-based recovery signals signs of ebullience amongst investors and expansion of REITs, asset diversification, imminent potential in industrial & logistics will keep them busy in the Indian market. Moreover, niche asset classes such as Data centers, student housing and life science will provide a unique opportunity for investors to diversify their investments.” said Vimal Nadar, Senior Director and Head of Research, Colliers India.
The report mentioned that the Inflows in the residential segment witnessed a significant uptick with a two-fold increase YoY amid a recovery in the residential sector and increased demand for capital. Private Equity funds are looking at providing capital for fresh investments in residential projects, and also for refinancing/restructuring existing loans of banks and NBFCs. The luxury segment accounted for about 35% of the total investments, with the rest in mid-income and affordable category projects. Luxury residential projects witnessed increased investments in 2021 as demand for bigger homes and gated communities has significantly increased during the past one year.
As compared to last year, the share of single city deals witnessed a two-fold increase during 2021, indicating investors’ rising preference towards specific high-quality assets in key locations. With increased investments in select luxury residential projects and data centres, Mumbai led the investment pie in 2021 with a 20% share. Foreign private equity investors continued to have the majority share in the investment volumes, but domestic funds have shown higher confidence, compared to last year, led by a steady recovery in the economy.