Institutional investment in retail real estate will more than sixfold to $492 million by 2022, according to a new report

According to Colliers India, institutional investments in retail real estate will more than sixfold to USD 492 million by 2022, as shopping mall businesses rebound well following the COVID pandemic.

Because of the negative impact of the COVID pandemic on shopping mall operations, retail real estate received only USD 77 million in institutional investments in 2021.

Overall, Colliers reported that institutional investments in the Indian real estate sector increased by 20% in 2022, reaching USD 4.9 billion, up from USD 4.08 billion the previous year.

Alternative asset classes, which include data centres, got USD 867 million in investment last year, a 92% increase from USD 453 million in 2021.

Alternative assets include, among others, data centres, life sciences, senior housing, vacation homes, and student housing.

According to Colliers India, the expansion of alternative assets is being driven by investors trying to diversify their portfolios due to consistent returns in several traditional asset groups.

Data centres accounted for approximately 52% of all alternate asset investments.

The office market accounted for 41% of overall inflows. In 2022, institutional investments in office assets increased by 50% to USD 1.98 billion, up from USD 1.32 billion the previous year.

Investment in mixed-use developments increased from 182 million to USD 464 million.

However, industrial and warehousing assets fell 63% to USD 422 million from USD 1,130 million (USD 1.13 billion).

Inflows into the residential segment fell by 29% to USD 656 million in 2022, from USD 919 million the previous year.

"Investments in Indian real estate have been constant over the last several years and so have the potential to increase due to the structural change in capital demand," said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.

Performance credit, unique situations, portfolio purchases, asset reconstruction, and related structures have grown in popularity and are likely to attract additional investment, he says.

"While we may see some deployment postponement in 2023, there is abundant dry powder in the market across core assets and alternate assets," Gupta added.

Colliers India Senior Director and Head of Research Vimal Nadar stated that the share of domestic investment inflows in 2022 has overtaken the share in 2021, accounting for 22% of overall inflows.

Residential assets continue to make for a significant portion of domestic investments, he adds.

"Overall, even if total investment inflows have yet to exceed pre-pandemic levels, investors continue to invest in India's real estate even in difficult circumstances. Large international investors will continue to collaborate with domestic enterprises to establish investment platforms "Nadar stated.

Colliers India is one of the country's major property consultancies.