Institutional investors are putting more money into residential real estate.

Because of the improved sales momentum in this sector of the market, institutional investors have begun to increase their investments in residential real estate.

Key factors such as record-low interest rates, pandemic-driven recognition of the need for home ownership, developer incentives, and increased buyer confidence bode well for the residential sector.

Furthermore, institutional investors consider recovery when investing in the right projects and locations.

The level of transparency in residential real estate has increased since the Real Estate (Regulation and Development) Act of 2016. This instils greater confidence in institutional investors, who are increasing their exposure to this market.

“We’ve seen a lot of consolidation in this space in recent years, and there’s a growing sense that the sector has been cleaned up. This, combined with the high level of residential demand, has enticed many investors to return to the market “JLL’s Lata Pillai is the Managing Director and Head of Capital Markets in India.

“Robust hiring over the last 18 months and rising incomes in technology, healthcare, and other sectors are likely to keep the momentum for housing sales and institutional investors’ interest in the sector.”

According to her, one of the standout features of 2021 investments has been the resurgence of the residential sector, which has seen the second-highest share of total investments in Indian real estate.

The residential sector will receive 2.3 times more money in 2021 than it did in 2020. This amounts to $1.08 billion, up from $460 million in 2020.

In response to the increased demand for residential properties, real estate developers are showing a willingness to invest in land and even collaborate on joint developments.

“In terms of land investment backed by funds, we are seeing the same activity as in 2014-2015. Until last year, it was through the purchase of unfinished projects; now, it is through development management agreements. Residential demand is expected to remain buoyant for the next four years, as the housing cycle typically lasts 5-7 years, according to institutional funds “Meraqi Advisors’ Managing Director, Gorakh Jhunjhunwala, elaborated.

The transactions completed in the last few quarters also indicate the continuation of the housing segment’s investment momentum.

Brookfield Asset Management recently invested over Rs 1,000 crore in Hyderabad-based realty developer INDIS’ five under-construction residential projects to expand its housing project portfolio in South India’s urban locations.

PAG, a global alternative investment firm, has agreed to invest approximately Rs 740 crore in two projects by real estate developer Kalpataru Group. Furthermore, Oaktree Capital Management invested Rs 425 billion in Hubtown’s 25 South, a prime sea-facing, high-end luxury residential development spread across 5.3 acres of land in Mumbai’s Prabhadevi neighbourhood.