The Colliers FY25 Global Investor Outlook has highlighted a surge in optimism among Asia Pacific (APAC) investors, with 67% planning to allocate capital to the region in the upcoming fiscal year. This positive sentiment stems from expectations of regional economic growth and the narrowing pricing gaps in major markets like India. The report emphasizes that APAC investors are poised to commit over 30% of their total assets under management (AUM) to real estate over the next five years. This trend is driven by a focus on sectors such as industrial logistics, office properties, and multi-family/build-to-rent assets. Among these, 61% of investors are targeting assets located in Central Business Districts (CBDs), with a particular interest in ESG-compliant office properties, which are anticipated to see valuation premiums in the coming years.

India stands out as a prime beneficiary of this investor confidence. The country's strong domestic economy, coupled with structural reforms and a growing middle class, makes it an attractive destination for institutional capital. Since FY21, institutional investments in India's real estate sector have amounted to US$ 19 billion (Rs. 1,60,531 crore), with nearly 40% directed towards office assets. In FY24 alone, the first three quarters saw investment volumes reach US$ 4.7 billion (Rs. 39,710 crore), which is 87% of FY23’s total inflows, signaling strong momentum for FY25.

The office sector in India is expected to see record absorption rates, driven by global capability centres (GCCs) and rising domestic demand. According to Mr. Piyush Gupta, Managing Director at Colliers India, office space remains a strong performer, particularly in Tier I cities where businesses continue to expand. On the other hand, the industrial and warehousing sectors are experiencing significant growth, thanks to the booming e-commerce and third-party logistics (3PL) industries. As online shopping surges and logistics networks become more complex, the demand for industrial spaces continues to rise. Meanwhile, residential real estate in Tier I cities is attracting increasing investor participation, primarily through joint ventures.

India's real estate landscape is also seeing growing interest in emerging sectors such as data centres, senior living, and life sciences. These segments are expected to offer long-term growth potential, though Mr. Chris Pilgrim, Managing Director of Global Capital Markets for APAC at Colliers, cautioned that there is a limited supply of investable-grade assets in these sectors. Despite strong demand, supply constraints remain a key challenge, which could impact investor returns.

This institutional inflow into Indian real estate is a reflection of broader economic trends and sectoral shifts in the region. As the market continues to evolve, India’s real estate sector will be pivotal in driving APAC’s overall growth trajectory. With investors targeting not only traditional sectors like offices and industrials but also emerging ones, India’s attractiveness as a real estate investment hub is set to grow even further.

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