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Real Estate News: Real Estate Investment Hits $3.4 Billion in H1 2022: CBRE

ByWillie M. Evans

Jul 22, 2022
Real estate investments saw strong capital inflows and reached $3.4 billion in the first half of 2022, according to CBRE’s ‘India Market Monitor – Q2 2022’.

According to the report, capital inflows in the first half of 2022 jumped 42% from the second half of 2021 and 4% from the first half of 2021. On a quarterly basis, capital inflows in the second quarter of 2022 rose to 2 billion USD, an increase of 47% compared to the first quarter of 2022. .

Delhi-NCR, Chennai and Mumbai led the total investment amount in the second quarter of 2022, with a combined share of around 90%.

Foreign investors accounted for more than 67% of the total investment volume in the second quarter of 2022, while the office sector dominated investment activity with a share of around 57%.

Institutional investors led investment activity with a nearly 65% ​​share, pumping cash primarily into brownfield assets, while developers (31%) continued to prioritize greenfield investments. Around 70% of capital inflows were deployed for pure investment or acquisition purposes during the second quarter of 2022, while 30% were committed to development or greenfield projects.

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

“In 2022, real estate investment is expected to grow further thanks to a strong rebound across all asset classes. With total capital inflows reaching $3.4 billion in the first half of 2022, we expect these investments to increase by more than 10% from the 2021 benchmark. Greenfield assets are expected to see a strong uptick in investment, however, we may feel the impact of volatility in the global investment market,” said Anshuman Magazine, Chief Executive Officer – India, Southeast Asia, Middle East and Africa, CBRE.

According to the report, interest in PropTech companies and RE ancillary companies is expected to increase amid the boom in the residential sector and recovery in other sectors.

Alternative Investment Funds (AIFs) will continue to be a major source of lending for the commercial real estate sector, as NBFCs also plan to establish AIFs to meet financing needs.

“Lead developers have raised over INR 18,700 crore (USD 2.4 billion) through QIP and IPO routes since FY2019 – something we expect to continue in 2022. With improved finances and higher residential sales strong in 2022, we also expect core developers to be in a much tougher situation. better positioned to negotiate with institutional investors of the funds at a comparatively lower cost,” said Gaurav Kumar, Managing Director of Capital Markets and Residential Business, CBRE India.

According to CBRE, office supply addition was 26.1 million square feet in the first half of 2022, up 26% year-on-year and leasing activity reached 29.5 million square feet square footage over the period, an increase of 157% over one year.

Small to medium-sized transactions (up to 50,000 sq ft) dominated space occupancy with nearly 84% share in Q2 2022 and Bangalore, Delhi-NCR and Hyderabad led space occupancy space, with a combined share of 67% in Q2 2022

Rental increases of around 1-5% from the previous quarter were recorded in several micro-markets in Delhi-NCR, Chennai and Bangalore and PBD Hinjewadi in Pune. SBD Kharadi in Pune and PBD in Hyderabad saw rent increases of around 6-9% QoQ

“Investments in alternative assets, especially data centers, could gain traction in the context of increasing digitalization and the strong political push towards a digital economy; sustainability and ESG practices would emerge as more prominent themes in investment strategies,” said Nikhil Bhatia, Managing Director of Capital Markets and Residential Business, CBRE India.

After hitting a new high in sales in the second quarter of 2022, the residential sector is poised for a strong year in 2022.

According to the report, home sales jumped 121% year-on-year to around 76,000 units in the second quarter of 2022, recording 9% growth quarter-on-quarter.

The number of units sold reached 146,000 in H1 2022; up 72% year-on-year and 30% half-yearly as 76,500 units were launched in Q2 2022; up 117% year-on-year and 26% quarter-on-quarter.

Residential real estate is poised for a strong year in 2022, with supply and new launches expected to show strong performance; increase in new launches expected in particular in Pune, Mumbai, Hyderabad, Bangalore and Delhi-NCR.