Hyderabad ranks among top five cities in India in real estate during 2018-22: Report

Hyderabad: CBRE South Asia Pvt. Ltd., a real estate consulting firm announced the findings of its report ‘Indian Real Estate: Betting on a ‘Capital’ Future’. The report highlights that Hyderabad attracted ~USD 2.24 bn of equity investments into the real estate sector during 2018-22, accounting for 7% of the cumulative investments in India. At a pan-India level, according to the report, overall investments in the RE sector between the period 2018-2022 stood at USD 43.3 billion. Equity investments over this period stood at USD 31.8 billion while debt investments were USD 11.5 billion.

With the closure of 24 land deals and the acquisition of ~970 acres of land, the city saw investments totaling USD 0.9 billion during 2018-22 into land/site acquisition. The city recorded second highest land acquisition activity in India, accounting for over 14% of the total land acquired since 2018.

A majority of the capital deployment made since 2018 has been through core and core-plus investment strategies. However, the city has been witnessing a growing number of bets being made through opportunistic route for greenfield developments.

Institutional investors leading the inflows in India

According to the report, cross-regional investors (outside APAC region) pumped in nearly 47% of overall investments in India since 2018. Domestic investors (mainly real estate developers) have invested over USD 13 billion, accounting for around 42% of the total investments during this period. The remaining fraction of investment flows in India was eventually accounted for by intra-region (within APAC) movements.

More than USD 17 billion have been invested by institutional investors over the past five years, with North American investors continuing to make up most of these investments. On a cumulative basis, the top three investors in India have pumped in over USD 10 billion, accounting for a staggering 60% of the total institutional investments during this period.

In terms of favored sectoral bets, the office sector has received more than 56% of institutional inflows (about USD 10 billion). Pent-up demand for the office space and an improvement in employee occupancy levels in business parks drove a solid rebound in office leasing. As a result, institutional investments in the office sector remained strong in 2022 as well. Acquisition of site / land parcels was another preferred bet, with total institutional inflows being recorded at over USD 2.5 billion, representing a nearly 15% share. Retail got over USD 2.0 billion in capital infusion, or more than 11% of total institutional investments, making it one of the top three preferred sectoral bets. In fact, closure of two large deals of over USD 100 million made the retail sector the second most preferred sector (within core sectors) after office.

A broad analysis of the Q1 2023 data showed that development sites / land acquisitions dominated investment flows with a share of about 49%, followed by the office sector (26%). Domestic investors (primarily developers) led the inflows in Q1 2023 with an almost 73% share; institutional investors garnered the remaining share. In terms of the geographical spread, Delhi-NCR (15%) followed by Mumbai (14%) dominated investment inflows during Q1 2023.

Anshuman Magazine, Chairman & CEO, CBRE, said, “Over the next two years, we expect investment flows to remain steady with cumulative inflow of USD 16-17 bn. Taking into account historical and current trends and the capital that existing investment platforms have raised over the past 2-3 years, we anticipate that the office sector will continue to attract the largest share of institutional inflows, followed by I&L and sites / land parcels. Moreover, we believe that alternative investments, specifically in data centres, could gain further traction. The fact that 2022 was a landmark year in terms of land activity is indicative of the long-term bets that investors are willing to take on the RE sector in India.”

Gaurav Kumar and Nikhil Bhatia, Managing Directors, Capital Markets and Residential Business, CBRE India, said, “India has now become one of the most attractive investment destinations in the APAC region. Sustained demand across all sectors combined with stellar returns has led to an influx of new investors who are looking to set up large investment platforms in the country."

Investments in site across top seven cities (2018-2022)