Institutional investment in Indian realty up 14% during H1 of 2022

V Nagarajan

Institutional investments in Indian real estate touched $2.6 billion during H1 of 2022, a 14 per cent rise from H1 2021. Investors are enthused by the recovery seen across the Indian real estate spectrum, after Covid-19-induced disruptions.

The inflows during H1 of 2022 was led by the office sector which accounted for about 48 per cent share, followed by the retail sector with a share of 19 per cent, according to a survey by Colliers India.

On a quarterly basis, inflows into Q2 of 2022 are up over the previous quarter, while registering a 50 per cent increase from the average quarterly inflows of 2021.

“The first half of this year has witnessed euphoria of businesses bouncing back with increased office and industrial leasing, retail and travel spend, and continued buoyancy in the residential sector. However, the market is seeing some caution on account of geopolitical tensions and increased expected risk-adjusted returns. Investments in India continue to increase in both development and operating assets.”

“With the current business environment, India will benefit the most from the Asian economies with increased capital inflows. The Indian real estate is likely to witness both equity and credit inflows tapped by existing and newer Investment management platforms, ” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.

Interestingly, domestic investors are back in the market with a 38 per cent share in H1 of 2022, a massive jump from just 13 per cent share in H1 of 2021.

Domestic investors were majorly inclined towards mixed-use assets and the retail sector.

However, investments continue to be driven by foreign investors wherein pension and sovereign funds are betting on income-yielding assets in the office, retail and industrial sectors.

During H1 of 2022, the office sector garnered about 48 per cent of the investments. Investors are seeing encouraging signs of revival in the office sector since late last year.

While a hybrid style of work is the dominant mode of working, large technology corporates continue to lap up office spaces. Investors are taking a medium to a long view of the sector, with the intention of bundling assets into REITs. As a result, investments in the office sector rose 20 per cent YoY in H1 of 2022.

The retail sector saw a 19 per cent share in investments as investors look toward completed malls as an investment avenue. India’s retail market is seeing an expansion of fashion and F&B brands.

Also, malls have been seeing a healthy pick-up in footfalls since last year. The industrial and logistics sector and the residential sector saw subdued inflows during H1 of 2022.

Investments inflows into alternate assets rose 53 per cent YoY during H1 of 2022 to about $370 million, indicating that investors are betting big on diversifying their portfolios. Deals during this period ranged from data centers, holiday homes and life sciences.

“A recession in the global markets will have some bearing on India. On the positive side, we see this boosting IT services in India. We can expect more investments in global capability centers in India over the next few years. Moreover, there is untapped potential in India’s alternate assets which investors are looking for from a diversification perspective. During H1 of 2022, inflows in alternate assets accounted for 14 per cent of total investments. The next few quarters will see some greenfield investments, especially in the office and industrial & logistics sector,” Vimal Nadar, Senior Director and Head of Research, Colliers India.

I am planning to buy a resale property in Bengaluru. Is TDS deduction statutory? Please clarify. Kashyap, Sharjah

Yes. When an NRI buys immovable property from a resident, you are supposed to deduct TDS at 1 per cent if the sale consideration exceeds Rs 5 million.

In the event you are buying from another NRI and if long-term capital gains are applicable, then TDS should be deducted at 20 per cent.

Tax deducted is to be deposited within 30 days of such deduction. Non-deduction or late deduction will invite penalty at 1 per cent per month.

We are two brothers trying to dispose of our ancestral property in Hyderabad. My brother is India and I am unable to travel. Can I a power of attorney resolve the situation to register the deal? Shishir, Dubai.

Yes. You will have to get attestation of the specific power of attorney in the Gulf with the Indian consulate.

You may grant PoA to your brother in India for the purpose of executing and registration of sale deed. Once it is received in India, it has to be stamped and signed with the appropriate stamp duty paid.