Indian real-estate funding up 82% in Q3 2023: Report

The Indian real estate sector received institutional investments worth 679.9 million during the third quarter of 2023, marking an 82 per cent growth from $373.43 million in the same period last year, according to real estate consultant Vestian.

Residential assets attracted $298.3 million of institutional investments during the July–September period, up 71 per cent from $174.3 million in the year-ago period.

Domestic investors accounted for 71 per cent of the institutional investments received in Q3 2023.

Meanwhile, the share of foreign investors reduced to 27 per cent in Q3 2023 from 55 per cent in Q3 2022. Total institutional inflow in the July–September period fell 57 per cent compared to the previous quarter, due to a significant decline in foreign fund inflow.

“Institutional investments have slowed down during the September quarter due to limited interest from foreign investors amid a challenging global macroeconomic landscape,” said Shrinivas Rao, Vestian CEO. However, he noted that large conglomerates are calling employees back to office from flexi-working arrangements, which may inflate demand for office spaces across the country and lead to increased investments in the upcoming quarters.

Across asset classes, the residential sector attracted the highest institutional investments during the third quarter of this calendar year, although the share has decreased to 44 per cent in Q3 2023 from 47 per cent a year earlier.

The share of commercial assets (office space, co-working, retail, and hotels) declined to 24 per cent in Q3 2023 from 40 per cent in Q3 2022.  

Office assets attracted $164.1 million worth of institutional investments during July–September, compared to $150 million in the year-ago period. The share for the industrial and warehousing sectors increased to 28 per cent in Q3 2023.

Further, the government’s ‘Make in India’ campaign and the growing popularity of e-commerce resulted in an increased demand for industrial spaces and warehouses across the country, Vestian said. “This led to significant interest from large investors.”