Institutional Investments in Indian Residential Real Estate Surge by 71% in July-September Quarter: Vestian

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    Institutional investments in India’s real estate sector demonstrated remarkable growth during the third quarter of 2023, surging by 82 percent to reach $679.9 million, as reported by real estate consultancy firm Vestian. This marked a substantial increase from the $374.3 million recorded during the same period the previous year.

    Notably, residential properties proved to be the focal point of this investment surge, attracting a substantial $298.3 million from institutional investors. This figure represented a substantial uptick of 71 percent when compared to the $174.3 million received in the corresponding period a year earlier, according to Vestian’s report.

    The report further highlighted that domestic investors accounted for a significant 71 percent of the total institutional investments during the third quarter, signifying a notable shift in investment dynamics. The share of foreign investors decreased from 55 percent in the third quarter of 2022 to 27 percent during the same period this year.

    However, it’s important to note that while institutional investments in the Indian real estate sector are on an upward trajectory, total inflows in the July-September period did experience a 57 percent decrease when compared to the previous quarter. This decline was largely attributed to a significant drop in foreign fund inflows, a trend that Vestian CEO Shrinivas Rao attributed to the challenging global macroeconomic landscape.

    Rao commented on the situation, stating, “Institutional investments have slowed down during the September quarter due to limited interest from foreign investors amid the challenging global macroeconomic landscape.”

    Despite the overall increase in institutional investments, the residential sector’s share of these investments saw a slight dip from 47 percent to 44 percent, according to Vestian’s report. Meanwhile, commercial assets, including office and co-working spaces, retail spaces, and hotels, accounted for 24 percent, down from 40 percent in the third quarter of 2022. Office assets alone attracted $164.1 million in institutional investments, a modest increase from the $150 million recorded during the same period the previous year.

    A notable trend emerged in the industrial and warehousing sector, with its share increasing from a negligible level in the third quarter of 2022 to 28 percent this year. Vestian attributed this growth to the Indian government’s ‘Make in India’ initiative and the burgeoning popularity of e-commerce, which drove a heightened demand for industrial spaces and warehouses, thereby attracting significant interest from large investors.

    Rao offered an optimistic outlook, noting that large conglomerates have started encouraging employees to return to the office. This shift in work dynamics is expected to fuel demand for office spaces in the coming quarters, potentially leading to increased investments in the office sector.

    “As a result, upcoming quarters may witness increased investments on the back of this renewed demand from the office sector,” Rao said.

    Also Read: Vestian Report Forecasts 52% Growth in Flexible Office Space by 2025

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