Institutional investments in housing segment surge 71% in July-September: Vestian

Institutional investments in the housing segment saw a significant increase of 71 per cent, reaching $298.3 million during the July-September period, as reported by real estate consultant Vestian. In the same period the previous year, the housing sector had received $174.3 million in institutional investments.

Vestian's report for the third quarter of 2023 revealed that the Indian real estate sector witnessed institutional investments totalling $679.9 million, marking an 82 per cent increase compared to the same period in the previous year when the inflow was $374.3 million. However, the total institutional inflow for the July-September period dropped by 57 per cent compared to the previous quarter, primarily due to a significant decrease in foreign fund inflow.

Vestian CEO Shrinivas Rao commented on the report, stating that institutional investments slowed down in the September quarter, mainly due to reduced interest from foreign investors in the face of a challenging global macroeconomic environment. He also noted that large conglomerates are calling their employees back to the office, which could lead to increased demand for office spaces across the country, potentially driving more investments in the upcoming quarters.

"Institutional investments have slowed down during the September quarter due to limited interest from foreign investors amid a challenging global macroeconomic landscape," Rao said. 

In the third quarter of 2023, domestic investors accounted for 71 per cent of the total institutional investments, while foreign investors' share decreased to 27 per cent, down from 55 per cent in Q3 2022.

Breaking down the investments across different asset classes, Vestian reported that the residential sector attracted the highest institutional investments during the third quarter of the calendar year, although its share decreased to 44 per cent in Q3 2023, compared to 47 per cent a year earlier. The share of commercial assets, including office space, co-working spaces, retail, and hotels, dropped to 24 per cent in Q3 2023 from 40 per cent in Q3 2022.

Office assets received $164.1 million in institutional investments during the July-September period, compared to $150 million in the same period the previous year. Industrial and warehousing assets received $190.3 million during the same period, accounting for 28 per cent of the total inflow. In the year-ago period, industrial and warehousing parks did not receive any funds.

(With PTI Inputs)