In 2023, institutional real estate investments in India reached a five-year low

By Bricksnwall | 2024-01-12

Foreign investors' real estate holdings decreased by 30% in 2023 compared to 2022 as they became more cautious.

Institutional investments in the Indian real estate market decreased by 12% in 2023 to $4.3 billion from $4.9 billion in 2022. According to data released on Thursday by workplace solutions company Vestian, it is the lowest investment in the sector since 2019, when it was $6.5 billion.

It emphasized the circumspect approach taken by overseas investors in the face of global challenges. The amount of foreign investments decreased by 30% from $3.9 billion in 2022 to $2.7 billion in 2023. Its percentage of all institutional investments decreased from 79% to 65% in the previous year.

Seventy-two percent of the investments made by foreign investors went toward commercial assets, reflecting their greater emphasis on this market. It was followed by the industrial and warehousing sector at a distance of 15%.

Nonetheless, domestic investors remained confident in the industry; total investments more than doubled to $1.5 billion in 2022 from $687 million. From 14% in 2022 to 35% in 2023, the proportion of domestic investors grew.

Domestic investors allocated 42% of their capital to commercial assets. In residential projects, it was trailed by 39%.

"The optimism of domestic investors kept the real estate market buoyant, as they continued to show confidence in India?s growth story," said Shrinivas Rao, chief executive officer of Vestian.

A 95% decrease in co-investment to $18 million from $360 million in 2022 was also observed, mostly as a result of foreign investors' prudent approach.

Previous data from Colliers revealed that institutional investments in the industry decreased during the October?December quarter. During the quarter, these investments were valued at $822.3 million. 37% less than $1,299.40 million during the same time last year.

Because of the strong growth of the Indian economy and a good pipeline of planned infrastructure improvements, Vestian anticipates that the institutional investments will return.