Institutional investment in realty falls to 5-year low at Rs 33k cr, may not improve in the coming 2-3 quarters

New Delhi: The corona pandemic and the economic slowdown in the country led to a 12 percent fall in institutional investment in real estate industry in India in fiscal 2019-20. The total institutional investment stood at Rs 33,800 crore last fiscal, property consultant Vestian said in a report.

Last fiscal received lowest institutional investment in real estate in the last five fiscals.

For the fourth quarter ended 31 Mach 2020, the institutional investment went down by 44 percent to USD 727 million as against the corresponding quarter of the previous financial year.

The commercial real estate in India received around 81 percent of the total investment in last fiscal. This was followed by the residential real estate at 13 percent share of about Rs 3,700 crore.

Pune, Mumbai and Bengaluru together accounted for about 90 percent of the investment in realty in India. Mumbai received the highest share at 42 percent. Maximum investment was by investors from the Singapore, USA, Hong Kong and Japan.

The real estate market in India is expected to be lackluster for the coming 2-3 quarters due to the corona virus pandemic and the lockdown. The residential real estate market is expected to take even longer. 

The investors including the private equity funds will be cautions in selecting developers and projects given the fact that there are lot of uncertainties in the India real estate market due to various factors like shortage of labour and longer wait for government approval which will result in extended timelines of completion of projects. With more risks, the funds that have been available at 15-16 percent will cost 18-20 percent now. 

Even the American PE firms may become wary of investment in India in the coming few quarter. They have otherwise led the investments in Indian realty.