The Indian real estate sector saw a substantial boost in institutional investments, reaching $679.9 million in the third quarter of 2023, marking 82 percent growth compared to the same period last year. Residential assets dominated the investments, accounting for $298.3 million, a 71 percent increase year-on-year. Domestic investors led the way with 71 percent of the institutional investments, while foreign investors' share dropped from 55 percent in Q3 2022 to 27 percent in Q3 2023. Commercial assets' share decreased from 40 percent to 24 percent. Despite a slowdown attributed to foreign investors' limited interest, prospects for increased office space investments are expected as companies recall employees to offices.
During the third quarter of 2023, the Indian real estate sector experienced a remarkable surge in institutional investments, totalling an impressive $679.9 million. This figure represents an 82 percent increase from the $373.43 million recorded during the same period in the preceding year, according to real estate consultant Vestian. Notably, residential assets stood out as the frontrunner, attracting $298.3 million in institutional investments during the July–September period. This marked a substantial 71 percent surge from the $174.3 million recorded in the corresponding period the previous year.
In terms of the sources of these investments, domestic investors emerged as the driving force behind institutional investments in Q3 2023, commanding a substantial majority share of 71 percent. In contrast, the share of foreign investors receded to 27 percent in Q3 2023, a notable decrease from the 55 percent recorded in Q3 2022. The overall institutional inflow for the July–September period witnessed a decline of 57 percent compared to the previous quarter. This dip was primarily attributed to the significant reduction in foreign fund inflow.
Residential assets retained their status as the primary draw for institutional investments during the third quarter of the calendar year. Nevertheless, their share slightly decreased to 44 percent in Q3 2023, down from 47 percent the previous year. Conversely, the share of commercial assets, encompassing office spaces, co-working spaces, retail properties, and hotels, declined to 24 percent in Q3 2023. This marked a significant drop from the 40 percent share recorded in Q3 2022. Specifically, office assets displayed robust performance, attracting $164.1 million in institutional investments during the July–September period, compared to $150 million during the same period a year earlier.
Notably, the industrial and warehousing sectors witnessed a notable upswing, claiming a 28 percent share of institutional investments in Q3 2023. This increase was partly propelled by the government's 'Make in India' initiative and the surging popularity of e-commerce. These factors led to an increased demand for industrial spaces and warehouses throughout the country. Vestian underlined that these developments piqued the interest of substantial investors who sought to capitalize on the growing industrial and warehousing sectors in India, indicative of promising growth prospects in this arena.
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