In a sign of increasing attraction of the global market in comparison to India, outflow of capital from the country into commercial real estate market globally has surged significantly in the past one year, according to a recent report.
Knight Frank's Active Capital Report 2019 says that India's outbound capital in the commercial real estate segment increased by 92 per cent to $700 million during the financial year 2018-19.
"Many major economies are facing the latter stages of a prolonged expansionary cycle. The signals are clear; global growth is slowing and interest rates remain stubbornly anchored near record lows. This environment has important implications for real estate investors," the report said.
The United Kingdom, the Netherlands, Germany, the United States of America and Australia were the top destination countries for Indian capital investments, it said.
Inbound cross-border investment volumes into Indian commercial real estate accounted for $2.6 billion during the April-March period of FY2018-19.
During the period under review, total outbound capital from Asia Pacific dropped 34 per cent (from $88 billion to $57 billion), coming in third behind North America ($110 billion) and Europe ($104 billion), due in part to the significant fall in outbound capital from China.
In the same period, Singapore overtook Hong Kong, recording a 23 per cent increase in outbound capital. According to the report, Singapore has already invested more than $4 billion into China, South Korea, the UK and Australia in Q1 2019, reflecting several landmark cross-border deals.
Neil Brookes, Asia-Pacific Head of Capital Markets, Knight Frank, said: "In the past 12 months, outbound capital from Asia-Pacific, and Singapore in particular, has sought out alternative asset classes in Western markets while reducing their exposure to retail assets in the region, previously thought of as a core asset class."
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said that with geopolitical factors coming into play, prolonged global economic cycle and interest rate in late cycle investment is prompting cross-border capital flows.
"Indian investors are increasingly looking at international commercial real estate assets to diversify risk and increase their returns," Baijal said.