OVERSEAS INVESTMENTS IN INDIAN REALTY INCREASE BY 137 PERCENT
India, among all emerging markets, has attracted the highest interest of global investors on account of a stable government and implementation of path breaking reforms such as the Goods and Services Tax (GST) that would formalise the economy. This has led to foreign investments in Indian realty increasing from USD 3.2 billion during 2011-13 to USD 7.6 billion during 2014-16 recording a surge of 137 percent, says Knight Frank’s Active Capital report.
Mumbai, the financial capital of India attracted the biggest pie of foreign investments in 2016, accounting for at least 39 percent of the capital flow in Indian reality followed by 32 percent by the hot investments hubs of Gurugram and Noida. India’s Silicon Valley Bengaluru (11 percent) topped the chart among other metros followed by Chennai (10 percent) and Delhi (4 percent). Hyderabad accounted for 2 percent share and Pune another 2 percent.
Domestic and foreign investors, both have started showing interest towards office space. Foreign investors are getting more inclined towards office space and retail. Also, the inflow of funds from investors into the Indian real estate sector grew by 40 percent year-on-year. The investors include – private equity, pension funds, sovereign funds, domestics investors, funds from NBFCs, says the report. In 2016, investors from the US formed the largest share of investments made into India followed by Canada and Singapore. Canadian investors particularly the large pension funds have started investing in India since 2015, it says.
Accounting for more than 40 percent of the investments, the US held the largest share of foreign investors followed by Canada (18 percent) and Singapore (17 percent). Canadian investors largely the pension funds forayed into India since 2015.
The sector-wise analysis for investments in 2016 showed that foreign investors were mostly lured by office spaces and the retail sectors. Collectively, the two segments accounted for 72 percent of the investments, says the report. The findings were sync with overall global projections which showed that overseas investors were looking beyond global Super Cities. The report added that more than 30 percent of the total global real estate transactions will be cross border by 2018.