A spike in investment activity in the real estate sector in the Asia Pacific region is expected in 2024, with India being one of the major destinations for inflows, according to a report by Colliers.
“2024 definitely looks more positive than 2023. There’s a lot of pent-up equity looking to find a home,” said Chris Pilgrim, MD, Global Capital Markets, Asia Pacific at Colliers. He pointed out that the depth of capital in most Asian markets had to diversify, and real estate would be one of the sectors in which allocations are set to rise.
The Colliers report said that investment momentum was building up and some major transactions would be closing early next year, leading to more strategic plays in the second quarter of 2024 and a surge in volumes from the third quarter onward.
With India one of the fastest-growing economies in the region as well as globally, led by private consumption and capital formation, investors are finding attractive investment opportunities in the real estate sector, including office, logistics, private credit, residential, and data centres.
“A lot of foreign funds are considering which big markets in the region they can invest in, and India has been the net recipient of that. Particularly in the office and logistics sectors, it has become a very institutional market dominated by Canadian and Singaporean capital,” said Pilgrim.
According to Colliers, in the first nine months of 2023 institutional investments into the Indian real estate sector rose 27 per cent on year to $4.6 billion, with foreign inflows having a dominant 77 per cent share. More than half of the flows were in the office sector.
More than the office sector, which is currently seeing subdued activity due to the slowdown in the developed economies, investors are showing considerable interest in logistics, warehouses, and data centers.
The Colliers report said that institutional investors were specifically capitalising on India’s data centre growth story, sparked by the stable income, higher yields, and supportive regulatory framework of this asset class.
More regional investors and funds were beginning to underwrite India as a market as part of a wider investment strategy.