As Donald Trump prepares to assume the presidency of the United States, global markets are abuzz with speculation about the economic policies his administration might pursue. Among the many questions being raised, one particularly significant issue looms for India’s commercial real estate sector: how will potential shifts in U.S. interest rate policies under Trump influence foreign institutional investment (FII) in the country?
According to industry experts, India’s commercial real estate market has been a favored destination for global investors in recent years, thanks to robust economic growth, regulatory reforms, and promising returns. However, with the U.S. Federal Reserve likely to continue adjusting interest rates to align with Trump’s fiscal agenda, a tightening monetary policy could disrupt the flow of capital to emerging markets like India.
This story dives into the interplay between U.S. interest rate decisions, investor sentiment, and the broader dynamics shaping foreign capital inflows into Indian commercial real estate. Will Trump’s policies cause a capital flight, or will India’s strong fundamentals retain its allure for global investors? The answers could redefine the sector’s trajectory in the coming years.
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Ashish Agarwal, Co-Founder, Enzyme Office Spaces, says the rate-setting policies of the US Federal Reserve have significant implications for investments in the Indian commercial real estate market.
“Historically, an increase in US interest rates prompts foreign institutional investors to adjust their portfolios in emerging markets. However, with stable rental yields in grade A commercial properties ranging from 7 to 8 percent and India’s GDP projected at 6.5% for 2024, the country continues to be an appealing investment destination. More importantly, the yield differential between US treasury bonds and Indian commercial real estate remains favorable, sustaining interest from foreign institutional investors,” he says.
LC Mittal, Director, Motia Builders Group, says, “What is particularly intriguing about the current situation is that despite elevated US interest rates, there remains a consistent interest from foreign institutional investors in Indian commercial real estate,
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