Real estate investment tops $1.35 billion in second quarter: JLL

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Institutional investors deployed $1.357 billion into the Indian commercial real estate market in the second quarter (April- June) of 2021, representing a ninefold increase year-on-year, according to JLL’s  ‘Capital Markets Update Q2 2021’ report.

“Despite the second wave of COVID hitting India in April this year, the first six months of 2021 saw investments of $2.7 billion which is 53% of the total investments seen in 2020,” said Radha Dhir, CEO and Country Head, India, JLL.

Investors are showing resilience and are adapting to the uncertain environment. Relaxing lockdowns during the first three months of 2021 also gave investors a first-hand experience of the post-pandemic world. This led to risk re-rating and asset allocations witnessed a subsequent change in Q2 2021, she said.

Key Highlights:

  • Most active second quarter investment market for five years
  • Institutional investments in real estate witnessed a 9x rise in Q2 2021, Year-on-Year (YoY)
  • First six months of 2021 saw investments of USD 2.7 billion which is 53% of the total investments seen in 2020
  • Logistics and Industrial comprised of 55%, while retail stood at 20% of total transactions in Q2 2021

The warehousing and logistics sector has been the biggest beneficiary during the pandemic and attracted total investments of over $1 billion during Q2 2021, said Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

Investments in the warehousing and logistics sectors were attractive due to the increasing shift to online shopping from discretionary to essentials.

Major global funds have invested with warehousing developers and operators as scale and regional footprint are the key differentiators in the sector. Some funds are following opportunistic strategies by investing in marquee retail assets and have been selectively investing in well-established malls.

Though the economic dent created by the second wave will lead to slower growth in 2021, investments in real estate are expected to stay strong through the year, the report said.

Defensive sectors like warehousing and data centers are likely to gain center stage, while office assets will gain interest with more visibility on work from office trends, it added.

The REITs market is expected to get a further boost as the reduction in lot size of REIT units is expected to drive more retail participation.