Chandigarh, June 27, 2018: Knight Frank, the independent global property consultancy, today launched Active Capital: The 2018 Report. Looking at the shifts in capital flows, the report dives into the sources and destinations of cross-border investments in commercial real estate.
Key India findings of the report:
• India ranks an impressive 19th position amongst the 73 countries that attracted cross-border capital into their property market in 2017. With USD 2.6 bn of cross-border capital inflows (excluding development sites), India ranks ahead of its Asia Pacific regional counterparts like Malaysia, Thailand, Indonesia, Vietnam and Philippines, who collectively attracted lesser capital flows compared to India.
• Capital flows into Indian property market have been 10 times higher than the outflows in
2017. USD 2.6 bn of inflow was recorded compared to outbound capital flows to the tune of USD 0.26 bn last year. Led by a battery of reforms like RERA, GST and demonetisation, the attractiveness of Indian real estate potential has caught the fancy of international investors and developers alike resulting into this favourable investment account.
• Compared to 86% share in 2016, United States, Canada and Singapore collectively contributed to 84% of capital inflows to Indian property followed by United Kingdom, United Arab Emirates and Hong Kong in 2017.
Table: Source of capital inflows (excluding development sites) in to India
Rank Source 2017 Investment Volumes ($) Share
1 United States 893,454,127 34%
2 Canada 746,837,396 28%
3 Singapore 571,655,965 22%
4 United Kingdom 362,519,460 14%
5 United Arab Emirates 48,202,742 2%
6 Hong Kong 20,896,118 1%
• 80% of the outbound capital flows from India find place in Austria, United States and Singapore collectively. The rest finds way into United Kingdom and Portugal property market.
Table: Destination of capital outflows (excluding development sites) from India
Rank Destination 2017 Investment Volumes ($) Share
1 Austria 85,713,778 32%
2 United States 76,150,000 29%
3 Singapore 49,714,478 19%
4 United Kingdom 30,635,678 12%
5 Portugal 23,802,096 9%
• While the capital outflow from India has been volatile for a long period, between 2014-2017, the outflows subsided to USD 1.9 bn compared to USD 2.5 bn during 2010-2013. In the latest four-year period, the inflows were over four times the outflows compared to the earlier four year period when they were just over one time. The changes in business environment brought by landmark reforms like GST, demonetisation and RERA besides others; coupled with government impetus for housing and an imminent possibility for REITs as an asset vehicle has improved the prospects of the Indian property market as an attractive investment destination.
Table: Cross-border capital flows (excluding development sites) into real estate
2010 – 2013 2014 – 2017
Inbound capital (into India) $ 2.7 bn $ 8.0 bn
Outbound capital (from India) $ 2.5 bn $ 1.9 bn
Inbound/Outbound 1.1 4.2
Shishir Baijal, Chairman & Managing Director, Knight Frank India, said “Cross-border capital inflows
(excluding development sites) to India stood at USD 2.6 bn in 2017 recording a 31% growth over 2016. Ranking an impressive 19th position amongst 73 countries that attracted cross-border capital into their property market, India has surged ahead of its Asia Pacific regional counterparts which collectively attracted lesser capital flows compared to India.
The changes in business environment brought by landmark reforms like GST and RERA besides others coupled with government impetus for affordable housing and an imminent possibility for REITs as an asset vehicle have infused confidence among the stakeholders of the Indian property market. In the latest four-year period (2014 – 2017), the inflows were over four times the outflows compared to the earlier four-year period (2010 – 2013) when they were at par. This highlights a paradigm shift in Indian realty’s potential as an attractive investment avenue.