India's Real Estate Sector Sees 3-Fold Rise In FII Inflows to $26.6 Billion During 2017-22

India received cumulative foreign institutional investment (FII) inflows of $26.6 billion into real estate in the past six years between 2017 and 2022, a three-fold rise from the preceding six-year period. Foreign investments in India have been on the rise over the past few years as the industry underwent an overhaul, with major structural, policy reforms inducing transparency and ease of business operations, according to a report by Colliers.

The report, titled ‘India– High on Investors’ Agenda’, looks into the factors that make India a preferred choice for global investors and how it has stepped ahead of other emerging economies. It also tracks the recovery and growth of the real estate market.

Sankey Prasad, chairman and managing director of Colliers India, said, “India’s favourable demographic indicators, deep digital talent pool, developmental government policies, infrastructure advancements, and competitive costs have made it one of the top choices for global enterprises, fuelling real estate demand in India.”

He added that the strong economic and business fundamentals are enhancing institutional investors’ sentiments; forging strategic partnerships to expand their portfolios. The office sector saw the highest investments during 2017-22, accounting for about 45 per cent of the total foreign inflows. While investors remain buoyant on office assets, their interest in alternative assets is surging.

“Over the years, global investors have favorably looked at Indian real estate given the resiliency, positive economic outlook, and promising growth prospects of the sector relative to its global peers. According to the report, foreign investments accounted for a sizeable share of 81 per cent of the total investments in real estate during 2017-22,” the report said.

It added that the country’s investor-friendly FDI policies, increased transparency in deal structures, and higher investment limits through the direct route have encouraged global investors to invest in India’s real estate sector. Institutional investments in real estate continue to remain upbeat in Q1 2023 as well, rising by 37 per cent YoY at $1.7 billion, led by the office sector.

Piyush Gupta, managing director (capital markets and investment services) of Colliers India, said, “India is on a long-term structural upcycle over the next few years and opportunities galore across spectrum and asset classes in real estate. Over the years, investment in Indian real estate has been getting broader and diversified with newer emerging concepts and themes. India’s attractiveness from manufacturers, occupiers, and investor’s perspective in the Asian Market is on the consistent upswing.”