Rising foreign investment in the Indian real estate market

                Real estate sector in India is at its zenith. It has always been one of the most evolving sectors is one of the primary contributors to employment with seven percent of the country’s GDP. Furthermore, it is expected that by 2025 its 
contribution will increase to a whopping 13 percent.

The investment trends for the last three months highlight one key trend – Strong investor confidence in the Indian real estate sector, which has resulted due to the following factors:

1) Direct investment in Indian real estate and ownership 

The decision to liberalise FDI norms in the construction sector is perhaps the most significant economic policy decision taken by the government of India. Real estate investment tops $1.35 bn in Q2 2021, thereby reflecting a nine-
fold increase. Despite the second wave of the coronavirus pandemic that hit India in April this year, the first six months of 2021 saw investments worth $2.7 billion, which is 53% of the total investments seen in 2020.

2) Investment by way of REITs or equity investment in listed companies

Real estate and infrastructure have become key factors of growth in a fast-growing economy like India where cities are expanding at a rapid pace. The sector is estimated to touch $650 billion by 2025, thereby contributing 13 percent 
of India’s GDP and by 2040, the realty sector is estimated to grow to $9.3 billion, which was at a mere $1.72 billion in 2019. Gazing at these numbers, it is evident that the Realty and Infrastructure sector is a viable avenue for 
investors.

As of present day, there are about 11REITs and InvITs in operation across India out of which 10 have AAA level security. India began 2021 with the successful launch of the country’s third REIT – Brookfield REIT (issue size of around 
$512 million). Despite the pandemic, the net absorption of real estate was high, indicating that REITs are streaming up as a destination for investment. This will only further fuel the realty sector that adds to the domestic and global 
community’s confidence in REITs. Therefore, India’s REIT market is all set to enter a new growth phase with more REITs to be listed in 2021.

3) By way of huge influxes into the property technology (prop-tech) space

Technology has permeated into almost all industries, and the real estate sector is no exception. On one hand the realty industry has been quick to identify opportunities in the adoption of technology, the government has been 
simultaneously coming up with various initiatives to drive in the same among the industry players. Few of the marquee campaigns of the government are ‘Digital India’, “Global Housing Technology Challenge’, “IndiaChain’, and so 
on, that are making the access of technology easier and more holistic. As more and more homebuyers in India plan and execute their property purchases through virtual platforms in the aftermath of the coronavirus pandemic, the 
real estate industry has assimilated technology in a way that has made it more resilient, invincible and given it a new and vibrant dynamism.
The PropTech industry in India attracted over $551 million in 2020, surpassing the aggregate of 2019; $549 million.

Blox as a startup with no team or build-out but only a concept and investor deck managed to raise 2.1 mn at a post money valuation of 12.1 mn. Global investors are excited for the long term prospects of the Indian real estate 
industry and more specifically, the digitization of the industry that is now certain to happen in light of the pandemic.

Source: Construction Week online