Hyderabad accounted for almost half of the investments in real estate in Q1 2021

listed REITs positioned India on the radar of institutional investors. The market capitalisation of India’s listed REITs stood at $6.6 billion as on April 16, 2021, which is around 30% of the total market capitalisation of Nifty Realty Index companies.”>JLL said the successful debut of three listed REITs positioned India on the radar of institutional investors. The market capitalisation of India’s listed REITs stood at $6.6 billion as on April 16, 2021, which is around 30% of the total market capitalisation of Nifty Realty Index companies. (Representative image)

Office assets in Hyderabad have emerged as the most preferred investment destination in the domestic real estate sector with institutional investors pouring in $384 million, or roughly Rs 2,850 crore in Q1 2021. India’s second silicon valley accounted for almost half of the $922 million (around Rs 6,870 crore) investments made during the quarter.

According to JLL India, institutional investments in Hyderabad’s commercial office assets rose multi-fold on an annual basis to hit $384 million during January-March 2021. It was followed by Mumbai, which attracted investments to the tune of $193 million (around Rs 1,440 crore).

“Hyderabad witnessed the highest capital flows of $384 million, accounting for a 42% share of investments during Q1 2021, due to the launch of new developments by Phoenix Group. Mumbai accounted for 21% share of investments with $193 million deployed in its office and residential segments, supported by reduction in stamp duty introduced by the Maharashtra state government,” JLL India said.

Overall, institutional investments continued the momentum in real estate during Q1 2021, registering 21% y-o-y growth at $922 million. Investments were driven by more activity from funds and closed development stage deals and were further supported by external macroeconomic factors.

“However, the pandemic surge during second half of March 2021 is expected to delay the investment pipeline in second quarter,” JLL India said.

Commercial office assets dominated deals with $864 million, accounting for 94% of the total value in Q1 2021. Office space developers liquidated their portfolios to deleverage or raise growth capital for the next phase of expansion. In addition, investors are actively scouting for warehousing assets at present and deals are likely to be concluded in coming quarters. Housing sector continues to experience an infusion of last-mile funding for project completion.

JLL said the successful debut of three listed REITs positioned India on the radar of institutional investors. The market capitalisation of India’s listed REITs stood at $6.6 billion as on April 16, 2021, which is around 30% of the total market capitalisation of Nifty Realty Index companies.
Going ahead, JLL said “Institutional investments have stayed on a firm wicket despite the pandemic in 2020 and are likely to gain further pace in 2021”.

The real estate consultancy also pointed out some key trends that are expected to emerge in the sector. “Investors are likely to continue evaluating deals and concluding investment processes with relaxation in conditions. JLL believes that the listing of more REITs will gather pace in 2021, also influencing the investment momentum,” it said.

The recovery in housing sector is expected to attract funds, especially for projects in the last stages of completion. Smart recovery in demand in 2021 is expected to improve investment prospects.