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Knight Frank’s Active Capital: The 2018 Report

June 25, 2018 05:43 PM

 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, which 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%

 

 

      2,643,565,808

100%

  • ·         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%

 

 

          266,016,030

100%

 

  • ·         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.”

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