“Foreign real estate investment falls 30% to $2.73B, overall sector drops 12% to $4.3B in 2023”
Last year, the money coming into the Indian real estate from foreign investors dropped by 30%, totaling $2.73 billion. However, investments from local players more than doubled, reaching $1.51 billion, according to data from real estate consultant Vestian.
Vestian’s data shows that the overall institutional investments in real estate decreased by 12% to $4.3 billion in 2023, compared to $4.9 billion in the previous year.
The consultant pointed out that cautious foreign investors contributed to the 30% annual decline in their investments, while domestic investors increased their contributions by 120%. Domestic investors invested $1.51 billion last year, up from $687 million in 2022. On the other hand, investments from foreign funds decreased to $2.73 billion in 2023 from $3.93 billion in 2022.
As a result, the share of domestic investors rose from 14% in 2022 to 35% in 2023. Vestian’s CEO, Shrinivas Rao, mentioned, “Despite uncertainty in the real estate sector, investments remained strong throughout the year. The confidence of domestic investors in India’s growth story kept the real estate market positive.” Even though investments hit a five-year low in 2023, Vestian predicts a comeback in 2024 due to India’s strong economic performance and a robust pipeline of planned infrastructure projects.
The statement added, “A stable global economy, robust economic growth in India, a large domestic consumer base, the focus on work-from-office policies, and favorable government initiatives like the National Logistics Policy and Make in India are expected to attract both foreign and domestic investors to actively participate in India’s growth.”
Rao noted that the Indian real estate sector is expanding rapidly with new asset classes emerging, leading to a growing need for funds. “This increased demand for capital may result in high returns for investors. In anticipation of these returns, investors may inject more capital into the sector,” Rao suggested.
To provide context, in 2019, institutional investments in Indian real estate were $6.5 billion, followed by $5.9 billion in 2020 and $4.8 billion in 2021.
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