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Updated February 13th, 2024 at 17:53 IST

Foreign real estate investments plummet 30%, while domestic capital surges 120%

Overall institutional investments in the real estate market declined by 12% to $4.3 billion in 2023, compared to the previous year's $4.9 billion.

Business Desk
Real estate
Real estate | Image:Unsplash
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Foreign funds fade: Foreign investments in the Indian real estate sector experienced a drop of 30 per cent last year, totalling $2.73 billion, according to Vestian data. In contrast, investments from domestic investors more than doubled, reaching $1.51 billion, showcasing a 120 per cent increase. Overall institutional investments in the real estate market declined by 12 per cent to $4.3 billion in 2023, compared to the previous year's $4.9 billion.

Shift in investor share

The decline in foreign funds was attributed to a cautious approach, leading to a decrease from $3.93 billion in 2022 to $2.73 billion in 2023. Conversely, domestic investors exhibited confidence by increasing their contributions from $687 million in 2022 to $1.51 billion in the same period. This resulted in a notable shift in the share of domestic investors, rising from 14 per cent in 2022 to 35 per cent in 2023.

Vestian's CEO, Shrinivas Rao, expressed optimism despite uncertainties in real estate demand, citing the resilience of investments throughout the year. Rao attributed the buoyancy in the real estate market to the unwavering confidence of domestic investors in India's growth story. While 2023 witnessed a five-year low in investments, Vestian anticipates a resurgence in 2024, driven by the robust performance of the Indian economy and a substantial pipeline of planned infrastructure projects.

Policy pull

Rao highlighted factors such as a stabilising global economy, strong economic growth in India, a large domestic consumer base, the emphasis on work-from-office policies, and favourable government initiatives like the National Logistics Policy and Make in India, which are expected to attract both foreign and domestic investors.

Vestian emphasised the rapid expansion of the Indian real estate sector, with the emergence of new asset classes leading to an increased demand for funds. Rao anticipates that this heightened demand for capital may result in attractive returns on investments, encouraging investors to inject capital into the sector. Institutional investments in Indian real estate were $6.5 billion in 2019, $5.9 billion in 2020, and $4.8 billion in 2021.

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Published January 29th, 2024 at 12:33 IST

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