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India a mature real estate market with $5 bn fund flows per year: McDonald

India's real estate market in 2022 saw a more evenly distributed dispersion of investment as compared to 2020

Real Estate

Real estate development (Photo: Wikimedia Commons)

BS Web Team New Delhi

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India's real estate market has seen a dramatic transition in recent years that has improved transparency, structure, and made it more appealing for international institutional investors said Andrew McDonald, head of real estate consultant Cushman & Wakefield in an interview with The Economic Times.

"India is now seen as a more mature and investable commercial real estate market, with an average fund flow of approximately $5 billion per year. This has led to increased confidence among institutional investors, and there is a growing willingness to explore India as a market," he said to ET adding that there is an incredible level of excitement and confidence in the economy of India.

McDonald claimed that as corruption has declined and the country's standing on the ease of doing business index has risen, institutional investors' interest in the Indian market has increased. The investments made by Blackstone, Brookfield, GIC, and other significant investors, as well as the accomplishments of public real estate investment trusts, serve as evidence of this.

He said to ET, ""While there are still some investors who may be reticent due to past experiences, the regulatory improvements and other factors have created significant opportunities in the Indian market. There is an opportunity cost of now not being in the Indian market."

The Real Estate (Regulation & Development) Act of 2016 (RERA), bankruptcy rules, and the goods and services tax (GST) have all been implemented in India, and in the recent 5-7 years, infrastructure spending has also expanded dramatically in the country.

In contrast to 2020, when commercial investments predominated and residential investments declined because of market difficulties, the Indian real estate market in 2022 saw a more evenly distributed distribution of investment.

Matthew Bouw, CEO, Asia Pacific, Cushman & Wakefield said, "Last year, investments were more evenly spread between office, residential and industrial logistics. Going forward, I believe this mix will likely remain similar, with the possibility of more investment in residential depending on the market. The $5-billion investment in the Indian market is likely to continue to grow, but the asset-class mix will likely stay the same."

"India has been largely insulated from the mild recession in the US, but the severity and depth of a potential downturn can have a more pronounced impact. Overall, the recovery in Asia, including China, will be beneficial to India due to the amount of economic activity it produces in other markets and investments," Bouw said. 

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First Published: Mar 31 2023 | 8:49 PM IST

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