India among top EMs where capital may flood real estate sector

India will be among the top three emerging market (EM) economies where capital will flood the real estate sector, a top industry executive said, while projecting prospects for higher investor returns once interest rates start declining.

As flush-with-cash global investors wait and watch for the sector to revive in core markets like the US and Europe, increasingly mature emerging markets such as India, Brazil and Mexico offer windows of opportunity, Gustavo Favaron, global real estate lobby GRI Club’s chief executive officer, said in a recent post.

While the range of options to deploy capital in the past was vast, “the current geopolitical arena has served to narrow the list significantly, with India, Brazil, and Mexico standing out at the top,” Favaron, who is also the co-founder of global private equity and investment firm 8 Capital Group, wrote.

The 2024 Kearney foreign direct investment (FDI) confidence index released last month had ranked India at 18th spot, followed by Brazil at 19th and Mexico at 21st spot. About 88% of investors surveyed by Kearney, 6% more than last year, said they were planning to increase their FDI in the next three years.

Burnishing India’s credentials at a time when global real estate investors are setting sights on promising emerging economies, Favaron said the fastest growing economy is in line to become the world’s third largest economy in the next three years with a gross domestic product of $5 trillion.

Blackstone, which has $1 trillion in assets under management (AUM) globally, including $50 billion in India, has charted plans to invest an additional $25 billion over the next five years in the country.

Blackstone chief operating officer John Gray had then said that India would remain the company’s third biggest investment destination, behind only the US and the UK.

Favaron also noted out that Brookfield, another global institutional investor with big plans for India, this month announced plans to deploy over $10 billion in India’s real estate sector over the next three to five years, doubling its assets under management in the country.

Brookfield had said that it aims to diversify into housing, industrial, and retail sectors, aligning with India’s growing economy.

The recent Asia Pacific (APAC) Investor Intentions Survey by real estate consultant CBRE, which has $90 billion AUM in India, said India remains the No.1 destination for foreign capital into APAC’s emerging markets, with Mumbai and Delhi standing out as the leading cities.

“2023 also saw an increase in Japanese real estate funds moving to India. Notoriously diligent with their investments, this is a strong sign that opportunities in the country have a reliable potential for promising returns,” Favaron added.