In 2023, institutional investments in India’s real estate sector experienced a notable decline of 12%, settling at $4.3 billion, in contrast to the $4.9 billion recorded in 2022, as per a report by Vestian. However, amidst this decline, domestic investors emerged as key contributors, with investments surpassing the $1.5 billion mark, marking a remarkable 120% growth from the $687 million recorded in 2022.
This surge in domestic investment resulted in an increased share of domestic investors in the real estate sector, jumping from 14% in 2022 to a substantial 35% in 2023. This significant rise in the share of domestic investors can be attributed to the prevailing global challenges and headwinds, prompting a shift towards more localised investment strategies. Conversely, the share of foreign investors contracted from 79% in the preceding year to 65% in 2023, amounting to $2,733 million. This reduction in foreign investor share was primarily influenced by the macroeconomic slowdown and global uncertainties.
Breaking down the investment preferences by asset class, domestic investors exhibited a preference for commercial assets, which include office spaces, co-working facilities, retail establishments and hospitality projects, constituting 42% of their investments. Residential projects secured the second-highest share, capturing 39% of domestic investments. On the other hand, foreign investors concentrated the majority of their funds, approximately 72%, in commercial assets. The industrial and warehousing segments trailed behind with a modest 15%.
Despite the dip in investments, the report foresees a revival in 2024, propelled by the robust performance of the Indian economy and a promising pipeline of planned infrastructure developments. Factors such as global economic stabilisation, India’s economic growth trajectory, a burgeoning domestic consumer base, the increasing focus on work-from-office policies and favourable government initiatives like Make in India and the National Logistics Policy are anticipated to attract both foreign and domestic investors, setting the stage for active participation in India’s growth narrative.
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Dhwani is a content management expert with over five years of professional experience. She has authored articles spanning diverse domains, including real estate, finance, business, health, taxation, education and more. Holding a Bachelor’s degree in Journalism and Mass Communication, Dhwani’s interests encompass reading and travelling. She is dedicated to staying updated on the latest real estate advancements in India.
Email: dhwani.meharchandani@housing.com
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