Institutional real estate in India witnessed 57 deals last year

V Nagarajan

Institutional real estate (realty) deals in India in the year 2021 witnessed 57 deals as compared to 27 deals in 2020.  Investments in 2021 were spread across various sectors and were much more diversified as compared to the previous year.

Institutional investments in India in 2021 closed at $4.3 billion, a decline of 14 per cent over the pandemic year 2020, according to JLL’s ‘Capital Markets Update Q4, 2021’.

Investments have been much broad-based with the first three quarters reporting improvement as compared to the same quarter the previous year.

“One of the major reasons for the decline in investment volume has been the intermittent breakdown in the investment process due to the severe impact of the second Covid wave during the first half of 2021. However, there is a clear sign of broad-based recovery with positive investor sentiments being seen across all asset classes,” said Lata Pillai, Managing Director and Head, Capital Markets, India, JLL.

“The continued policy support in form of accommodative policy stance, expected push on infrastructure spend and committed dry powder by institutional investors is expected to drive 2022 investments at par with the momentum witnessed during 2017-2020”, according to Dr Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.

Office continues to lead at 31 per cent, Residential comes back with 25 per cent share.

Investments in the office sector accounted for the largest share of 31 per cent during 2021 while it was highly skewed during 2020 due to two large portfolio deals amounting to $3.2 billion.

Office space net absorption was up marginally by 2 per cent year on year (Y-o-Y) at 26.2 million sq ft. in the top seven cities in India as compared to the previous year.

The residential sector attracted 2.3x investments at $1,081 million as compared to $460 million in 2020.

The renewed interest in the sector has been mainly due to the sharp recovery witnessed with a robust sales growth of 47 per cent during the first nine months of 2021 over the same period of 2020.

Investors provided structured funds to the sector as these were closer to the equity returns.

Warehousing, logistics, and data centre continue to witness increased interest from investors with logistics accounting for 20 per cent of the total deal volume while data centre investments have started picking up with a few joint ventures announced in the segment.

Consolidation in real estate has led to a parallel trend of increasing investments at the entity level with mergers and acquisitions gaining traction.

Hyderabad has been leading the investment scenario with core and development stage transactions by leading global funds.

Mumbai has witnessed higher interest in the residential segment due to the sharp recovery in residential home sales during the year.

The continued policy support in form of accommodative policy stance, expected push on infrastructure spend and committed dry powder by institutional investors is expected to drive 2022 investments at par with the momentum witnessed during 2017-2020.

The build-up of asset portfolios for the listing of new REITs, increased competition for quality assets, geographical and asset diversification and a strong interest for logistics and data centres in the ‘new normal’ will be the major investment drivers during 2022.

I have taken home loan to investment in a large apartment in Delhi. Is availing home loan advantageous for homebuyers? R.G. Gupta, Sharjah.

Yes. Home loans are currently available at all time low interest rates starting at 6.7 per cent. In fact some of the developers facilitate waiver of EMIs during the construction stage. Tax concessions make home loans more attractive. You can also get tax deduction on repayment of the principal amount of a loan.

The interest paid on a loan is deductible from ‘income from property’, even if it has not been paid during the year. Besides interest paid on a new loan taken to repay the original housing loan is also allowed as deduction.

I have been living in the Gulf for the past three years and recently received a flat as gift from my relative in India. Can I sell the gifted property and repatriate sale proceeds to my foreign account? Abhishek, Dubai.

You can repatriate the immovable property received by way of gift from your relative in India. The sale proceeds of the immovable property should be credited to NRO account only.

 From the balance held in the NRO account, you may remit upto $1 million, per financial year, subject to the satisfaction of the authorised dealer and payment of applicable taxes. You may be required to file tax return for property sale income and taxes paid on it.