Foreign capital inflow to the Indian real estate sector rises

V Nagarajan, Correspondent

During 2017-21, India’s foreign capital flows in real estate jumped 3x times to $24.0 billion compared to the preceding five-year period, as per Colliers report “Foreign investments in Indian real estate turn a corner” released in association with FICCI.Over the last five years, global investors have shown an increased inclination towards investment in Indian real estate buoyed by regulatory reforms introduced in 2016.

Foreign investors, who had previously refrained from investing in the Indian real estate market due to the lack of transparency, started investing in the country with greater optimism from 2017. The share of foreign investments in Indian real estate has grown to 82 per cent during 2017-2021, compared to 37 per cent in the preceding five-year period.

During 2017-21, the Office sector holds the frontline of foreign investments with 43 per cent share in total foreign investments followed by mixed-use sectoraccounting for 18 per cent share in total foreign investments. The investments in the industrial and logistics sector remain at no.3 surpassing the residential sector. Foreign investors remained cautious about the residential sector in the aftermath of the NBFC crisis and subdued residential sales. The share of residential assets in total foreign investments has reduced to 11 per cent in 2017-2021, from 37 per cent in a preceding five-year period.

“Demand for alternative assets including life science labs, data centres, flex spaces has grown during the pandemic as investors seek new avenues for growth and returns. Data centres garnered a maximum share of 52 per cent of foreign investments in alternatives in last five years. Lack of income producing data centre assets in key locations and scope for future REIT listings will push investors to form new platforms for development opportunities. In the past five years, capital commitments equating $13.5 billion have been made by global data centre operators, corporates, and investors for the development of data centers in India”, says Vimal Nadar, Senior Director, Research, Colliers India.

Momentum in Industrial and logistics assets in India has picked up only in the last five years driven by robust demand from E-commerce and 3PL firms for modern warehousing facilities. In 2021, Industrial and logistics assets emerged as the top choice for foreign institutional investors, garnering almost a third of foreign investments ($1.1 billion) surpassing the office sector. Lack of ready Grade A industrial and logistics parks across tier I and II locations amid high demand scenario has pushed investors to create platforms forthe development of modern warehousing facilities in these locations.

During 2017-21, alternative assets saw an inflow of about $1 billion, with a majority of it coming during the pandemic years.Government policy for data localisation and infrastructure status received for data centres recently are likely to give a boost to the establishment of new data centres in the country.

The share of investments from the USA and Canada together has been more than 60 per cent in foreign investments each of the years since 2017. Despite the challenges posed by the pandemic, the funds from USA and Canada continue to actively explore the industrial segment, apart from the office and mixed-use assets. Similarly, the majority of the investments from Asia are targeted towards the office and industrial and logistics sector.

I have inherited agricultural land from my family. Can I retain it even if I am a PIO. In case I wish to sell the land at a later date what are the restrictions involved in the transfer? Please clarify. Chaithanya, Sharjah.

As regards inheritance, there is no tax implication in India. As you are a citizen of another country, you will have to comply with local laws of the land where you are based. You may apply to the sub-registrar along with your relative’s Will for transfer of property in your name. You can sell the land and the government rules prescribe that it can only be sold to a resident in India.

I am planning to buy an apartment from my father-in-law. Am I eligible to get a joint home loan from any institution along with my wife? Anand Ram, DubaiYes. You can buy and a sale deed is to be registered with due consideration with both you and your wife as purchasers. In case the sale consideration is lower than the market valuation, you may have to pay registration charges and stamp duty as per market rates. The funding institution will do its due diligence to arrive at the loan eligibility.