An Institutional Perspective to Real Estate Investing
In a nutshell
Global institutional investors have been the predominant capital providers to Indian real estate. In contrast, the domestic investors have remined largely under-served. This article highlights the journey institutional investor in to Indian real estate sector and potential for domestic capital to participate similarly
Real estate is a key asset class and most global institutions have allocations to the asset class as part of their portfolio strategy. The percentage allocation to real estate has been increasing steadily, in addition to the continued increase of assets under management. Reason for increased allocation are low yields in the fixed income market and all-time high public equity markets
Indian real estate has received increasing interest from global investors and deal sizes are moving up. This is borne by their positive experience with India markets having taken a disciplined approach to investing. Several recent deals have been in the credit space to benefit from the opportunities arising out of capital dislocation that started with defaulf of IL&FS in 2018.
Despite strong institutional interest and backing of India RE investments, domestic capital participation is limited due to lack of risk-mitigated opportunities and limited access to specialized real estate investment managers.