Indian Real Estate - Betting on a Capital Future

India’s strong macro-economic fundamentals, favourable demographics along with the evolving global trade and investment scenario ensured the country’s robust recovery in 2022 from pandemic lows. For Indian real estate as well, the year 2022 was rife with opportunity – as was evident from the unprecedented capital inflows witnessed by the sector. Equity investments in real estate exceeded even pre-pandemic levels, growing by over 32% Y-o-Y in 2022 to USD 7.8 billion. In fact, overall capital flows in the sector in the past five years (2018-22) stood at USD 43.3 billion, attracted by a growing portfolio of income-generating assets and development opportunities. Of this, nearly USD 31.8 billion was equity and the remaining USD 11.5 billion debt.

Below are a few broad investment trends that Indian real estate recorded in 2022 and during 2018-22:

• Cumulative equity inflows since 2018 touched nearly USD 32 billion, with average inflows of over USD 6 billion per year. Delhi-NCR, followed by Mumbai and Bangalore, dominated investments in 2022, accounting for a share of over 67% in total equity investments. These gateway cities have accounted for over 63% of the cumulative investments since 2018.
• Site / land parcels (48%) and built-up office assets (35%) accounted for nearly 83% of the investment flows in 2022. On a cumulative basis, these garnered over 78% of equity inflows during 2018-22.
• Institutional investors have consistently been a major source of capital deployment in Indian real estate. They accounted for ~55% of investments since 2018, followed by property companies/developers (33%).
• Nearly 6,800 acres of land have been acquired by developers and investors during 2018-22. The activity has especially accelerated in the past two years, with nearly 60% of the land being acquired from January 2021 onwards. As per CBRE, this acquired land is expected to unlock roughly 575-655 million sq. ft. of saleable development potential and would require USD 32 -37 billion for construction.
   

Our report, Indian Real Estate: Betting on a ‘Capital’ Future, is a reflection of the growth story of Indian real estate and what it will take for the sector to attain further highs. Click ‘download’ to know more!