India has already attracted huge interest from global investors due to a stable government and execution of major reforms like the GST (Goods and Services Tax). Foreign investments in Indian real estate have increased from $3.2 billion in 2011-13 to $7.6 billion in 2014-16. This indicates a rise of 137% in overseas investments according to reports. The financial capital of the country, Mumbai, attracted the biggest chunk of global investments for 2016, contributing close to 39% of capital flows in Indian real estate followed by 32% contributed by major investment hubs of Gurgaon and Noida. Bangalore contributed 11% and was followed by Chennai with 10% and Delhi with 4%. Hyderabad contributed 2% in the share of overseas investments while Pune contributed another 2%.
Both foreign and domestic investors have already started showing greater interest in office space. Foreign investors are more inclined towards retail and office spaces according to experts. The influx of funds from investors into Indian real estate witnessed growth of 40% on a year-on-year basis. The investors include pension funds, private equity, domestic investors, sovereign funds and funds from NBFCs as per reports. In 2016, investors from the United States made up the biggest chunk of investments made in the country followed by Singapore and Canada. Canadian investors, particularly the big pension funds, have commenced investments in the country from 2015.
Domestic investors dominated the Indian realty industry till the year 2008 while foreign players attained the spotlight since the year 2014. According to Samantak Das, the National Director and Chief Economist at Knight Frank India, the global economy has revived with good job opportunities, lower unemployment rates and growing inflation in developed economies. They are now seeking assets in emerging markets for investment purposes. India has attracted sizeable real estate investments in this regard according to Das.
With the Real Estate (Regulation and Development) Act of 2016 or RERA coming into effect and the emphasis on affordable housing, foreign investors have started investing in real estate along with domestic investors. The biggest share of foreign investments (40%) came from the United States while 18% came from Canada followed by 17% from Singapore.
The information is in sync with global projections which showcase that global investors are not just concentrating on global Super Cities. Reports have also stated that more than 30% of total real estate transactions globally will happen on a cross-border basis by the year 2018. Knight Frank’s report showcased the rise of investors from Asia which contributed $67 billion in foreign investments in the year 2016 as compared to $19 billion in the year 2007.
