domestic capital

The Indian real estate sector is now looking ready for expansion, with the opportunity to tap into about USD 41 billion in domestic institutional capital, according to JLL’s research. The industry welcomed FDI in 2005. The depth of domestic capital can be shown in the fact that, of all the exits since 2010, 73 per cent were assisted by domestic investors as opposed to 27 per cent by foreign investors.

The Indian real estate market is expected to reach USD 1 trillion, fueled by a number of macroeconomic drivers, including sustained GDP growth, growing urbanisation and significant inflows of foreign direct investment (FDI).

Due to the listing of real estate companies and the three commercial REITs in 2019 and 2020, the inclusion of exit through domestic public market channels began in 2016 as well.

The government has selectively loosened FDI regulations during the past ten years, encouraging more investment and corresponding growth.

With one of the highest levels of commercial and residential space absorption in the past ten years, 2022 was a phenomenal year for real estate. Office and housing markets are on the upswing and that trend is expected to continue through H1 2023.

The real estate market is changing into an organised and structured sector and establishing financial discipline as a result of the relaxation of the FDI policy and other policy reforms like the Real Estate Regulation and Development Act (RERA), Goods and Services Tax (GST), Insolvency and Bankruptcy Code, adoption of REITs, etc.

Due to the listing of real estate companies and the three commercial REITs in 2019 and 2020, the inclusion of exit through domestic public market channels began in 2016 as well.

The government’s recent regulatory measures have led to an increase in the involvement of financial institutions in the real estate market. According to RBI regulations, banks are permitted to invest up to 20 per cent of their net owned funds in equity-linked equities, mutual funds that invest in venture capital and REITs or InvITs.

Private pooled investment funds in India, including real estate, private equity and hedge funds, were made easier by SEBI’s AIF regulations in 2012. In India, the number of AIFs has skyrocketed since 2013. Currently, 23 domestic real estate funds have been announced and are working to raise a total of about USD 3.6 billion for real estate. AIFs are crucial for attracting both institutional and private capital to the domestic capital market.