Real Estate News: Real estate investments reaches USD 3.4 billion in H1 2022 : CBRE

Real estate investments registered strong capital inflows and reaches USD 3.4 billion in H1 2022, according to ‘India Market Monitor – Q2 2022’ by CBRE.

As per the report, capital inflows in H1 2022 jumped by 42% over H2 2021 and 4% compared to H1 2021. On a quarterly basis, the capital inflows in Q2 2022 stood at USD 2 billion, an increase of 47% over Q1 2022.

Delhi-NCR, Chennai, and Mumbai dominated total investment quantum in Q2 2022, with a cumulative share of about 90%.

Foreign investors accounted for over 67% of total investment volume in Q2 2022 while office sector dominated investment activity with a share of about 57%.

Institutional investors led investment activity with a share of nearly 65%, infusing liquidity primarily in brownfield assets, whereas developers (31%) continued to prioritize greenfield investments. About 70% of the capital inflows were deployed for pure investment or acquisition purposes during Q2 2022, while 30% were committed to development or greenfield projects.

The report also highlighted the office sector’s dominance of investment activity, with a share of about 57% – followed by land/development sites (30%) and the retail sector (10%). Foreign investors accounted for about 67% of the total investment volume in Q2 2022, with investments from Canada garnering a 59% share.

“In 2022, real estate investments are expected to grow further on the back of a strong rebound across asset classes. With total capital inflows reaching USD 3.4 billion in H1 2022, we expect these investments to rise by over 10% versus the 2021 benchmark. Greenfield assets are likely to witness a strong investment uptick. However, we might feel the impact of volatility in the global investments market,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.

Interest in PropTech firms and RE ancillary companies anticipated to increase amidst boom in the residential sector and revival in other sectors, as per the report.

Alternate Investment Funds (AIFs) will remain a major lending source to the commercial real estate sector as NBFCs also plan to set up AIFs to cater to funding requirements.

“Leading developers have raised over INR 18,700 crore (USD 2.4 billion) through the QIP and IPO routes since FY2019 – something we expect to continue in 2022. With improved financials and stronger residential sales in 2022, we also foresee leading developers being in a much better position to negotiate with institutional investors for funds at a comparatively lower cost,” said Gaurav Kumar Managing Director for Capital Markets and Residential Business, CBRE India.

According to CBRE, supply addition in office recorded at 26.1 mn sq ft. in H1 2022, up by 26% Y-o-Y and leasing activity reached 29.5 mn sq ft. during the period, a rise of 157% Y-o-Y.

Small- to medium-sized deals (up to 50,000 sq. ft.) dominated space take-up with a share of almost 84% in Q2 2022 and Bangalore, Delhi-NCR and Hyderabad dominated space take-up, with a combined share of 67% in Q2 2022

Rental increase of about 1-5% Q-o-Q was recorded across multiple micro-markets in Delhi-NCR, Chennai and Bangalore and PBD Hinjewadi in Pune. SBD Kharadi in Pune and PBD in Hyderabad recorded a rental rise of about 6-9% Q-o-Q

“Investments in alternate assets, particularly data centres, could gain further traction amidst rising digitalisation and strong policy push towards a digital economy; sustainability and ESG practices would emerge as stronger themes in investment strategies,” said Nikhil Bhatia, Managing Director for Capital Markets and Residential Business, CBRE India.

After scaling another sales peak in Q2 2022, the residential sector poised for a strong 2022.

As per the report, housing sales jumped 121% Y-o-Y to about 76,000 units in Q2 2022, recording 9% Q-o-Q growth.

Number of units sold touched 146,000 in H1 2022; up by 72% Y-o-Y and 30% on a half-yearly basis while 76,500 units were launched Q2 2022; up by 117% Y-o-Y and 26% Q-o-Q.

Residential real estate poised for a strong year in 2022, with both supply and new launches expected to post a robust performance; uptick in new launches expected especially in Pune, Mumbai, Hyderabad, Bangalore, and Delhi-NCR.

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