Institutional investors betting big on alternative realty assets

Institutional investors are betting big on alternative real estate assets including data centres, senior living and coliving segments jumped 26 per cent to $500 million last year, according to a report by real estate consultant Colliers India.

"Investors are lapping up alternate assets in India, having invested $500 million in such assets. This was a 26 per cent rise from 2020 in alternate assets that includes data centres, senior living, student housing and coliving," Colliers said in a statement.

Robust technology consumption and data privacy laws will also pave way for further investments in the data centres space, with investors and developers exploring development options, it added.

Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India commented, "The real estate business in India is witnessing significant transformation with a flight to high quality, technology, governance, and customer service. New business avenues such as data warehousing, shared spaces (be it office or residential), and Proptech are emerging with these changes".

The confidence in residential is back with improved governance, timely deliveries, a positive sentiment supported by increased liquidity in the sector. Special situation and credit funds are aiding in resolving stressed situations, he added.

Apart from data centers, there is likely to be more focus on greenfield assets in the industrial sector in 2022 led by strong demand from e-commerce companies. The Industrial and warehousing segment saw investments at a five-year high at $1.1 billion. Green financing through green bonds will also see greater acceptance this year in India as developers, asset owners and investors turn their focus to sustainable development. This trend has further been accelerated by the pandemic across geographies.

"India's strong economic recovery coupled with a steady positive outlook underpins growth in the property market. This creates a strong setting for greater investor confidence in 2022 and beyond. The residential sector saw investments of $900 million, the highest in four years. The affordable and mid segments accounted for 64 per cent of the investments, signaling this is where the action is," said Vimal Nadar, Senior Director and Head, Research, Colliers India.

The residential sector will continue to garner investments, both from private-equity players and Grade A developers looking for distressed properties in good locations. Overall, we expect deal-making to pick up post Q1 2022 as concerns regarding the Omicron variant starts subsiding, he added

According to the report, India is in an attractive position for foreign investments, with returns on property investment seen to be higher than developed countries. India is likely to emerge as the third-largest consumer economy by 2030 and this will spur growth across industries. While India's strengths in digital and technology is robust, the country is also slowly becoming an attractive manufacturing destination.