Foreign Investments Back In India After Lacklustre 5 Years

Shobhit Agarwal, MD – Capital Markets and International Director, JLL India

India-specific cumulative fundraising attained its peak in the pre-global financial crisis (GFC) period. During this period between 2005 and 2008, there were 50 such funds that raised USD 16 billion in total. However, post-GFC, only 29 funds got raised in five years, with cumulative fundraising of only USD 3.9 billion.

USD 2.2 billion has been raised so far for real estate in the current investment cycle. Not only has the volume of investment increased but there has also been an increase in the average ticket size from USD 134 million to USD 184 million. This shows how investors turned positive towards India post Modi becoming the prime minister. If investment done in USD alone is considered, the average ticket size has gone up from USD 30 million in 2009-13 to USD 39 million in the ongoing phase that started in 2014.

Quantum of domestic investment v/s foreign direct investment

Not only has the volume of investment increased but there has also been an increase in the average ticket size from USD 134 million to USD 184 million. This shows how investors turned positive towards India post-Modi becoming the prime minister. If investment done in USD alone is considered, the average ticket size has gone up from USD 159 billion in 2009-13 to USD 388 billion in the ongoing phase that started in 2014.

Foreign investor interest grows once again

During the pre-GFC phase, 82% of funds got raised in USD. This reduced to 57% in post-GFC phase when the going got tough and micro-market understanding was required more than banking on the macro-economy alone. The contribution, 2014-onwards, has increased considerably to 70% – hinting that the positivity is here to stay for sometime.

These changes reflect how foreign investor participation rises when the economy is moving up but when the tide turns, it’s the domestic investors – with familiarity of developments in micro-markets – that increase their focus on investment.

Period: 2005-08

Period: 2009-13

Period: 2014-ongoing

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