India’s real estate sector attracts $26.6 bn in foreign investment over 5 years: Report

New Delhi: India’s real estate sector has seen a three-fold increase in foreign institutional inflows, amounting to $26.6 billion between 2017 and 2022, according to a report by real estate services firm Colliers. The growth is attributed to structural and policy reforms that have enhanced transparency and ease of doing business in the sector.

The report, titled “India- High on Investors’ Agenda,” examines the factors that make India a top choice for global investors and tracks the real estate market’s recovery and growth. It also explores opportunities in core and alternative asset classes such as Global Capability Centers (GCCs) and Data Centers.

Foreign investments accounted for 81% of total investments in real estate during the period, driven by investor-friendly FDI policies, increased transparency in deals, and higher investment limits. Institutional investments remained strong in Q1 2023, with a 37% YoY increase to $1.7 billion, led by the office sector.

India’s property market currently offers attractive pricing, better valuations, and higher yields compared to other cities in the region, making it a preferred investment destination. Major Indian cities like Bengaluru and Mumbai provide higher yields at lower pricing points.

Investments across various real estate asset classes have seen significant inflows in recent years, with the office sector accounting for 40% of total inflows between 2017 and 2022. Foreign investments in industrial assets have also grown, constituting 87% of total investments in industrial and warehousing during the same period.