PE real estate investments are estimated to reach $6.5 billion in 2019.

By Abhay Shah, Realty Quarter

Real estate investment is estimated at approximately $6.5 billion, with the largest share of office investments. The commercial office sector, which experiences strong office demand, facilitates investors, both foreign and Indian, according to a recent RICS-Colliers report. Investors want to bundle up assets and list them as REITs, capitalizing on strong demand.

“The next ten years will lead the way to new formats for workplaces where landlords will emerge as wellness makers and where occupiers merge together workplaces and technology to improve productivity in workplaces,” says Ritesh Sachdev MRICS, Head of Occupier Services, India and Managing Director, South India at Colliers International.

Furthermore, relative to the housing sector, the office sector is strong. The annual average gross absorption of 50.3 million sq ft is projected across major towns between 2019-2023, which is about 18% above the average annual gross absorption over the previous five-year span, the report said.

The Indian economy is in the middle of a slowdown that has most affected by the housing industry. “Although we are not currently experiencing a full-blown recession as we had in 2008, the effect on the CRE market is only determined by the depth of the slowdown spreads,” says Nimish Gupta FRICS, Managing Director, South Asia, RICS.

The joint report stated, “The new supply projection of 160-180 million sq ft in 2019-2021 is also anticipated to promote the appetite of investors in towns such as Bengaluru and Hyderabad who face a lack of investment resources.”

Private equity (PE) players have pumped almost $56 billion into real estate since 2008, and domestic investors account for 57% of influxes. Foreign investors have concentrated on the asset-class of commercial offices for the last five years. Between 2014-H1 2019, Colliers observed that 70.0% of entire office investments were made by foreign investors.