institutional investments

Rise Of Institutional Investments In Delhi-NCR Giving Boost To Commercial Business

When it comes to finding a decent office space with well-established submarkets and corridors, Delhi-NCR is considered to be the most preferred location. In the last few years, the region has witnessed a remarkable infrastructural development which led to a massive surge in office occupancy in the outskirts of the capital. Having said that, Gurgaon has emerged as a major corporate hub, comprising most of the Fortune 500 companies. If we take the statistic figure into account, Delhi-NCR has a total Grade A stock of 137 million square feet, as of first quarter of 2022, with an additional 67 million square feet in the pipeline for the next five years. As the market is recovering from the disruptions caused by the pandemic, the demand for IT/ITes, BFSI and healthcare centres has begun to increase. As a result, the presence of quality stock and the rising demand by the occupiers make Delhi-NCR a top location for the institutional investments.

With institutional investments growing more assertive in India, the office sector in Delhi-NCR has also seen a substantial growth with a total inflow recorded USD 169 million last year. The positive momentum continued in 2022 as well with prominent funds investing in the office sector.

What investors want?

  • Grade A development – Quality specifications and professionally-managed facilities that ensure higher returns.
  • Leased over strata – There was a time when investors were seeking alternatives to infuse liquidity and Strata sale (sale to retail or individual investors) of commercial assets emerged as the lucrative option. However, with the transformation of real estate industry in the post-Covid era, several big investors are now giving preference to lease-based buildings over strata-sold properties as they will ensure fair market rentals.
  • Reputed developers – In the recent times, investors are looking for the developers having good reputation in the market and delivering quality supply that allows higher rate of interest.
  • Greener development – The pandemic has completely changed the dynamics of Indian real estate market. The investors now want to have a green-rated property encouraging sustainability and boosting work efficiency.
  • Low or no vacancy – A building which is either fully occupied or has a marginal vacancy to provide proper and on-time returns.

Investors investing in REITable stocks

You must be surprised to know that the office sector dominates the majority of REITable stocks in India. Around 13.3 million square feet of office stock in Delhi-NCR is a part of REITs and all this has happened because investors are actively expanding their portfolios by putting their money in commercial real estate. With the leading infrastructure development, improved facility and the gaining demand of premium office spaces, Delhi-NCR is expected to witness a significant growth in the commercial sector in the coming years and would also attract the institutional investors from all corners of the world.




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