January 1, 2020
Top global IT companies are likely to invest up to US$6.5 billion in commercial office spaces
India’s real estate sector has brought in US$56.6 billion in fresh investment since 2008
Commercial real estate, sector leader, to account for up to 40 per cent of inflows in 2020
Investor interest in the sector can be attributed to India’s many business-friendly reforms
Investment in India’s real estate sector is expected to increase by 5 per cent in 2020, as top IT companies from around the world are likely to invest up to US$6.5 billion in commercial office spaces, as per media reports citing the findings of Colliers, a global real estate consultant. In 2019, total investment into India’s real estate sector was valued at US$6.2 billion, which was 8.7 per cent higher than in 2018. This was a direct result of increased foreign investor interest in commercial real estate locations. These foreign funds made up 78 per cent of all investments in 2019.
The Colliers report detailed the performance of India’s real estate sector over the last decade, showcasing how a total of US$56.6 billion has been received since 2008. With commercial real estate being a primary target for investment, the report predicts it will account for up to 40 per cent of this year’s inflows. Commercial office space contributed 46 per cent of inflows in 2019, valued at US$2.8 billion.
The steady rise of investor interest in the sector can be attributed to several business-friendly reforms introduced in India. The report identified the primary factors being the establishment of the Real Estate Regulatory Authority, implementation of Goods and Services Tax (GST), the introduction of the Insolvency and Bankruptcy Code, and an easing of foreign direct investment norms as the key drivers of increased investment into the sector, and the country as a whole.
In addition, the report touched upon the potential investment opportunities presented by work-in-progress construction assets and the growing demand for thriving IT hubs across India. Despite a slowdown in residential assets within the sector, investors remain confident of commercial real estate continues to thrive as an industry.