Foreign inflows in India registers a 20% YoY rise at $3.6 billion in 2023

V Nagarajan

Colliers’ 2024 Investor Insights – Country Spotlight Series provides real estate investors and owners with unique insights into the year ahead and a deep understanding of key markets across the Asia Pacific region.

“2024 is anticipated to be a more dynamic year for the both the Asia Pacific real estate markets as well as capital in the region remaining the dominant investor in global real estate. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s diversity and increased opportunity”, said Chris Pilgrim, Colliers Managing Director of Global Capital Markets, APAC.

With IMF’s projected GDP growth rate of 5.7 per cent in 2024, India remains one of the fastest-growing economies globally, and one of the most preferred emerging countries within the Asia-Pacific (APAC) region, offering attractive pricing, better valuations, and higher yields.

Foreign inflows too witnessed a rebound in 2023 registering a 20 per cent year-over-year (YoY) rise at $3.6 billion.

These investments were not confined to traditional avenues but extended to alternative asset classes, bolstering the robust domestic growth in office, residential, and industrial segments.

Going forward, investor appetite is likely to remain strong with newer funds looking to enter the Indian market. While strong preference continues for income-yielding office assets, residential, industrial and alternatives are likely to witness renewed interest.

“Investments in Indian real estate have been consistent for the past few years and have an innate potential to grow further on account of structural changes in demand for capital.

Global investors have always remained at the forefront and consistently infused average $4 billion annually in the last five years, showcasing continued commitment and confidence towards the sector. With a rise on performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures the sector is poised to attract even more investments in the next few years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

While countries such as the US and Canada remain top source countries for capital, leading APAC countries such as Singapore, Hong Kong, South Korea, and Japan are also gradually eyeing India’s growing real estate market.

In 2023, Investment inflows from the APAC region surged 57 per cent YoY to $1.8 billion, of which 70 per cent were in office assets. However, apart from office assets, APAC countries have also shown interest in residential, industrial, and warehousing assets.

During 2023, the inflows almost doubled since 2019, signalling a significant uptick in investor interest and confidence in India’s real estate sector.

Looking ahead to 2024, investors are expected to increase their activity in India’s real estate market, driven by a robust economic performance, positive business environment and robust demand across core and alternative sectors. Anticipation of heightened activity in a way reflects certainty around the policy environment, narrowing gap between buyers and sellers and investor intent to deploy more capital across real estate asset classes.

“In 2023, a striking 90 per cent of investment inflows into India’s office sector originated from foreign investors, demonstrating strength of the underlying asset class. This marks a transformative period for the industry. Furthermore, as sustainability gains further prominence in investment decisions, the real estate sector including office market of India is set to align seamlessly with global Environmental, Social, and Governance (ESG) standards”, said Vimal Nadar, senior director and Head of research, Colliers India.

My mother died intestate and I have cleared her liabilities. My brother has not spent any amount for maintenance but claims a share in the property. What is the legal position? Amit Chugh, Sharjah.

As per the Hindu Succession Act, your mother’s property will be divided equally among her husband and two sons. As a result, your brother has the right to lodge a legitimate claim for the property. For your expenses, you can claim reimbursement.

I am in the Gulf for over three years and recently inherited property from my grandmother after her demise. Is there any tax implication? Gangadhar, Dubai.

There is no tax levied on the inheritance of property. It will not incur any tax in your hands as per the provisions of the Income Tax Act, 1961.