Indian real estate market experiences a decline in institutional investment by 58%.

Institutional investment in the Indian real estate market has dropped from a year earlier to $712 million during the quarter ended March by 58%. Total investments in the financial year 2019-20 experienced a 13% fall at $4.26 billion-the lowest for four years, a report by JLL India shows.

Several events affected the downturn, including the COVID-19 outbreak in late 2019 and early 2020, and other high-profile problems in the domestic banking and finance market.

“The effect of COVID -19 virus is unprecedented in its reach. Investors are likely to stay in a wait-and-watch phase, with vigilance and risk aversion likely to push institutional real estate investors’ dominant activity over the next few quarters,” said Ramesh Nair, CEO and Country Head of JLL India.

The impact of transition in investment climate was seen in asset allocation when more funds were parked in more secure and stable office spaces by investors. Office sector investments grew from $1.8 billion a year earlier to $2.9 billion during the year. The investment contribution in the Mumbai Metropolitan Region rose from 23% in 2018-19 to 43% of national investments in 2019-20.

As of December 2019, sovereign wealth funds held $29 billion in Assets Under Custody (AUC) in India. Real estate accounted for 22% of the $6.6 billion AUC. Recently, the Union Budget had proposed concessions for SWFs investing in infrastructure including affordable housing and logistics, but recent falls in crude prices may have an effect on their capital available for investments.