Institutional Investment in Indian Real Estate: Q3 2023

Institutional Investment in Indian Real Estate: Q3 2023

Indian real estate sector recorded institutional investments worth USD 0.7 Bn in Q3 2023, dominated by domestic investors in residential sector.

Vestian, a real estate consultant based in Bengaluru, has published its investment report ‘Institutional Investment in Indian Real Estate Q3 2023’.

The report states that the Indian real estate sector received institutional investments worth USD 0.7 Bn in the third quarter of 2023, registering a quarterly decline of 57%. Significant reduction in foreign investments amid global macroeconomic uncertainty led to a sharp decline in overall investments. Interestingly, institutional investments have shown the same trend in the past as well by slowing down in the third quarter of 2022 and 2021.

Institutional investments witnessed a substantial increase of 84% in current quarter compared to Q3 2022. Additionally, multi-city deals took lead and accounted for around 48% of total investments during Q3 2023. Mumbai and Chennai accounted for 25% and 14% shares, respectively.

Shrinivas Rao, FRICS, CEO, Vestian said, “Institutional investments have slowed down during the current quarter due to limited interest from foreign investors amid a challenging global macroeconomic landscape. However, large conglomerates are calling their employees back to the office which may inflate demand for office spaces across the country. As a result, upcoming quarters may witness increased investments on the back of this renewed demand from office sector.”

Residential sector accounted for the highest share of institutional investments, around 44%. However, the share has reduced from 47% in Q3 2022. On the other hand, industrial and warehousing sector captured 28% share in Q3 2023 compared to negligible investment deals in Q3 2022. Moreover, share of commercial assets (office, retail, co-working, and hospitality projects) decreased significantly to 24% in Q3 2023 compared to 40% a year earlier.

Domestic investors accounted for 71% of total institutional investments received in Q3 2023. On the other hand, share of foreign investors reduced to 27% in Q3 2023 from 55% in Q3 2022 as they entered ‘wait and watch’ mode amid market uncertainty. Rao further added, “Second half of the year is full of festivals which may push real estate demand northward, attracting significant investments.”

QuartersInstitutional Investments (USD Bn)Q-o-Q Change (%)Y-o-Y Change (%)
Q3 20220.4-86%-53%
Q4 20221.5316%103%
Q1 20231.2-19%-9%
Q2 20231.628%-41%
Q3 20230.7-57%84%

Source: Vestian Research

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