Real Estate Investments Expected to Increase by 5 % in 2020

After an 8.7% increase in investments in 2018, the Real Estate sector in India is expected to move north by another 5% in 2020. Pushed mostly by a high demand for commercial properties, the investments are likely to increase from $6.2 billion in 2019 to $6.5 billion in 2020. A large part of these investments in 2019 came in the form of funds from foreign firms purchasing commercial properties, with IT firms especially playing a major role. It is expected that investors would be focused more on commercial properties this year as well.

Several reforms such as the introduction of Goods and Services Tax, the establishment of the Real Estate Regulatory Authority, etc. have led to a rise in interest among investors. The relaxation in foreign investment norms has also been a major catalyst that has fuelled this trend. The rise in positive sentiments is also encouraging investors to explore office properties with good opportunities, including those that are still under construction. Commercial projects in the major IT hubs of India are also worth investing in. It is expected that projects in cities like Pune, Hyderabad and Bengaluru would bring a lot of profit due to the high demand for office spaces suitable for IT firms. Other than these, retail spaces, warehouses and co-working spaces are also emerging as prudent options that are attracting interest.

While foreign investments account for about 78% of the total investments made in 2019, commercial office spaces contributed to about 46% of the total inflows, estimated at about $2.8 billion. The commercial properties are expected to constitute 40% of the total inflow in 2020. According to experts, investors should approach residential properties in a more conservative manner, compared to commercial assets. This is due to the slowdown that the residential sector is currently undergoing.

The practice of co-living is expected to become more popular as more and more people have started to move to cities with better job opportunities. This leads to a higher demand for rented homes in India. Investors looking forward to investing in the residential sector might want to focus on such residential properties with co-living facilities.

Overall, the commercial segment of the real estate market in India is doing well, and the positive trend is expected to continue with the rising popularity of multiple assets in the domain. This will reinforce the overall realty sector going forward.