Institutional investment in realty down by 7% in 2020
$5.03 bn fall was due to an adverse impact of the Covid-19 pandemic, says JLL India
New Delhi: Institutional investment in the Indian real estate fell 7 per cent in 2020 at $5.03 billion due to an adverse impact of the Covid-19 pandemic, according to JLL India.
Investments stood at $5.43 billion during the 2019 calendar year. Institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign funded NBFCs and sovereign wealth funds. It also includes anchor investors in REITs.
"Institutional investment in Indian real estate staged a smart recovery during Q4 2020 with $3.5 billion investments. As a result, 2020 closed with $5 billion investments, equivalent to 93 per cent of 2019 transactions ($5.4 billion), despite a sudden halt brought on by the pandemic," JLL India said in a report. The consultant said that the pandemic led to pull back in investments due to uncertainty over income stability and return to normalcy.
"However, large global funds took this opportunity to negotiate portfolio deals with developers who offered quality rent yielding assets in cities with a higher presence of global technology players as well as global in-house centres," JLL India said. A deeper analysis of institutional investments in 2020 indicates that the recovery has been narrow-based, as 27 deals were transacted in 2020 over 54 in 2019.
The two large portfolio deals with an estimated value of $3.2 billion accounted for 65 per cent of the total investments in 2020. Office assets accounted for a major share of investments in 2020 at $3.1 billion as against $2.87 billion in 2019. Investments in portfolio deal (office, retail and hospitality) stood at $1.24 billion last year. In residential, the institutional investment fell to $460 million in 2020 from $1.07 billion in the previous year.