Institutional investment in alternative assets jumps 92% in India: Report 

January 14, 2023

Institutional investment in Indian real estate’s alternative asset classes jumped 92 per cent to $867 million in 2022, compared with $453 million in 2021, with sectors such as data centres and life sciences proving to be a big draw, according to Colliers. 

The report mentions that the growth of the alternative sectors is led by investors’ need to diversify portfolios. “Data centres accounted for about 52 per cent of the investments in alternate assets, while other assets include life sciences, holiday homes, hospitals, and more,” it said.

Similarly, inflows into the office sector saw a 50 per cent growth year-on-year, led by large deals. Investors saw resilience in greenfield and ready-to-move assets with most deals in the office sector driven by global investors.  

The report noted that global investors are attracted to the stable demand dynamics across asset classes, and opportunities to invest in operating and developing assets in the market. While global investors continue to dominate funding activities through higher participation in entity-led deals, domestic investors too have become more active.

Enthused, yet cautious

“The share of domestic investment inflows in 2022 has surpassed the share in 2021, at 22 per cent. Residential assets continue to account for a chunk of domestic investments. The total investment inflows are yet to outrun pre-pandemic levels, (but) investors remain vested in India’s real estate even in challenging times. Large global investors will continue to partner with domestic firms to set up investment platforms,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Overall investments in Indian realty touched $4.9 billion in 2022, growing 20 per cent YoY, as institutional investors remain enthused by the Indian realty market, albeit in a cautious environment, the report stated.

“Investments in Indian real estate have been consistent for the past few years. Performance credit, special situations, portfolio acquisitions, asset reconstruction, and related structures have also been growing and are likely to attract more investments. During 2023, while we may see some postponement in deployment, there is ample dry powder in the market across core assets and alternate assets,” said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.

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