Commercial office sector accounts for 46 pc of total inflows in 2020: Colliers

During 2020, private-equity investments into the Indian real estate sector came down by 23 per cent compared to that of 2019. At this juncture, investors are also eyeing alternate assets as well as projects that require last-mile funding. In India, investment firms and global developers are undertaking development risks and constructing office parks.

The commercial office sector accounted for 46 per cent of the total inflows in 2020 signifying investors’ unwavering confidence reflecting India’s continuing strategic advantage for Global occupiers as the office sector has witnessed some large investments by Global Funds in 2020, says Colliers Research.

In 2020, office assets accounted for investment inflows totaling USD2.2 billion Rs.15,450 crores, the sector showed resilience despite the global pandemic forcing occupiers to use remote working.

As technology companies in India continue to work remotely, markets like Bengaluru and Hyderabad are continuing to witness inquiries from global technology companies looking to set up their global in-house centers. However, as investment firms are now finding quality assets hard to come by, they are undertaking development risks.

Due to the ongoing pandemic, the residential segment has experienced lower sales velocity which is also impacting investment inflows. In 2020, investments in residential assets accounted for only 6 per cent of the total inflows.

It is believed that investors are increasingly infusing equity in companies directly as opposed to the structured debt route at a project level that investors largely used in the last decade.

As per Colliers Research, Tier 3 and Tier 4 data center assets can provide a net yield per annum of about 16 per cnt-18 per cent making them attractive for investors.