Institutional investments in Indian real estate surged by an impressive 27% year-on-year to USD 4.6 billion from January to September 2023, showcasing the sector's robust growth amid global uncertainties. Foreign investments held a dominant 77% share, while domestic investments doubled year-on-year, reaching USD 1.1 billion. Notably, domestic investors took the lead in Q3, contributing to 63% of total investments for the quarter. The Indian real estate sector remains a resilient and promising investment destination, with the office sector witnessing significant growth. Industrial assets also saw a remarkable 3.5-fold increase in investment, driven by India's booming manufacturing sector.
According to a report released by Colliers India, institutional investments in the Indian real estate market have displayed remarkable resilience and growth, surging by an impressive 27% year-on-year (YoY) to reach USD 4.6 billion during the first nine months of 2023. This surge underscores the sector's attractiveness despite global challenges and positions 2023 to potentially outpace the total investment inflows of the previous year.
Despite the prevailing global economic uncertainties, the Indian real estate market has continued to attract institutional investments at an accelerated pace. Total investment inflows for 2023 have already reached 93% of the total recorded in 2022, showcasing sustained investor confidence.
Foreign investments continued to dominate, comprising 77% of the total investments, while domestic investments experienced a significant two-fold YoY increase, reaching USD 1.1 billion. Notably, domestic investments took the lead in Q3 2023, accounting for 63% of the total investments, totalling USD 0.8 billion for the quarter.
While office assets saw a surge in inflows, residential and industrial & warehousing segments contributed to approximately 78% of the total investment volume. The strong economic growth and favourable market indicators in India have bolstered confidence among both global and domestic investors.
Investment inflows in the office sector soared 1.6 times YoY during January-September 2023, totalling USD 2.9 billion. Investors continue to show confidence in the sector's growth potential and returns, with a growing interest in completed or preleased income-yielding office assets. Joint ventures have become increasingly popular for capitalizing on emerging opportunities.
Domestic investors have become more active, contributing 23% of the total investments during this period, up from 18% in the same period in 2022. The majority of their funds flowed into the residential sector, driven by stable interest rates. Foreign investments maintained their lead, accounting for 77% of total investments with USD 3.5 billion inflows, marking a 47% YoY increase.
Investment inflows into industrial assets surged by an impressive 3.5 times, reaching USD 690.6 million during January-September 2023. This growth is attributed to the expanding industrial sector driven by robust demand and increased industrial output.
India's flourishing manufacturing sector has played a pivotal role in driving this growth, with indicators such as the Index of Industrial Production (IIP) and Manufacturing Purchasing Managers' Index (PMI) signalling strong demand conditions and enhanced business sentiments.
In conclusion, institutional investments in the Indian real estate market have experienced remarkable growth, reflecting the market's resilience and attractiveness. With strong domestic and foreign investor participation across various segments, the future of India's real estate sector looks promising. This surge in investments is expected to drive heightened activity in the upcoming festive season, boosting confidence among investors, developers, and homebuyers.
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