Institutional investments in real estate in 2021 closed at $4.3 billion, a decline of 14% over the pandemic year 2020, according to a new report by JLL.
According to JLL’s ‘Capital Markets Update Q4 2021,’ the year 2020 saw a sharp recovery in investments on account of two large portfolio deals amounting to $3.2 billion announced in the last quarter of the year.
On the other hand, investments in 2021 have been much broad-based with the first three quarters reporting improvement as compared with the year-earlier period.
ADVERTISEMENT
The year 2021 witnessed 57 deals compared with 27 deals in 2020, it said, adding that investments in 2021 were spread across various sectors and were much more diversified compared with the previous year.
“One of the major reasons for the decline in investment volume has been the intermittent breakdown in the investment process due to the severe impact of the second Covid wave during the first half of 2021,” JLL said.
“Though the investment climate showed signs of recovery during the third quarter of the year, the onset of a new variant and the uncertainty about its impact disrupted deal closures in Q4, 2021,” it said.
ADVERTISEMENT
Lata Pillai, MD and head, capital markets, India, JLL, noted that there was a clear sign of broad-based recovery with positive investor sentiments being seen across all asset classes.
Ms. Pillai added, “I believe our industry is poised for a much stronger 2022 looking at current investment momentum and deal flow that we are seeing on the ground.”
As per the report, one of the distinguishing features of the investments during the year has been the comeback of the residential sector which has seen the second-highest share of 25%. The residential sector attracted 2.3x investments at $1,081 million compared with $460 million in 2020. Investments in the office sector accounted for the largest share of 31% during 2021, while warehousing accounted for 20% and retail 13%.
Further, it added that Hyderabad, Mumbai, and NCR account for a 45% share of investments. Hyderabad and Mumbai each accounted for a 16% share of the total investments during 2021, while NCR-Delhi at 13% stood third.