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MUMBAI : Institutional investments continued the momentum in India's real estate market during the first quarter (Jan-March) of calendar year 2021, registering 21% growth in volumes at $922 million, but the pandemic surge is expected to delay the investment pipeline in the second quarter, according to JLL’s "Capital Markets Update Q1 2021" released on Tuesday.

“Institutional investment momentum continued during the first quarter of 2021, indicating the sustained investor interest in India’s real estate market," said Dr. Samantak Das, chief economist and head of research and real estate intelligence services (India), JLL.

“The resilience of the office market and confidence in its long-term growth led investors to chase quality assets available at the core and development stages. We also see the maturing listed REIT market providing an alternative to other asset classes, which lacked income stability," he added.

Within the segment, commercial office assets dominated deals with $864 million transacted, translating to 94% of the total value in the first quarter. Office space developers liquidated their portfolios to deleverage or raise growth capital for the next phase of expansion.

In addition, investors are actively scouting for warehousing assets at present and deals are likely to be concluded in the coming quarters. The housing sector, meanwhile, continues to experience an infusion of last-mile funding for project completion.

Among cities, Hyderabad witnessed the highest capital flow of $384 million, accounting for a 42% share of investments during the first quarter of 2021, due to the launch of new developments by the Phoenix Group.

Mumbai accounted for 21% share of investments with $193 million deployed in its office and residential segments, supported by the reduction in stamp duty introduced by the government of Maharashtra.

Also, the successful debut of three listed REITs further positioned India on the radar of institutional investors. The Brookfield India REIT issue of $521 million was successfully launched in February 2021 and was eight times oversubscribed, with domestic mutual funds being major anchor investors.

The market capitalization of India’s listed REITs stood at $6.6 billion as on 16 April 2021, which is around 30% of the total market capitalization of Nifty Realty Index companies.

JLL added that the listing of more REITs will gather pace in 2021, influencing the investment momentum.

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