Indian Real Estate Logs 30% Decline In Funds From Foreign Investors In 2023: Vestian

The consultant noted that investments from foreign entities declined 30 per cent annually due to their cautious approach, however, it increased by 120 per cent from domestic investors

The report said factors like a stabilising world economy, strong economic growth in India, a huge domestic consumer base, increasing emphasis on work-from-office policies, and helpful government policies are needed to lure foreign and domestic investors

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The fund inflow in Indian real estate from foreign investors declined 30 per cent last year to touch $2.73 billion, data from real estate consultant Vestian revealed. At the same time, the influx from domestic players gained over two times to reach $1.51 billion during the period, the data showed. 

The total institutional investments in real estate dipped by 12 per cent to touch $4.3 billion in 2023, against $4.9 billion logged in the preceding year, reported PTI. The consultant noted that investments from foreign entities declined 30 per cent annually due to their cautious approach, however, it increased by 120 per cent from domestic investors. 

During the reviewing period, domestic investors poured in $1,511 million in 2023, compared to $687 million in the preceding calendar year. The funds from foreign funds stood at $2,733 million in 2023, against $3,926 million logged in 2022. The share of domestic investors also rose to 35 per cent in the reviewing period, while the share stood at 14 per cent in 2022. 

Elaborating on the data, Shrinivas Rao, CEO, Vestian, noted, “Despite uncertainty in demand across the real estate sector, investments remained robust throughout the year. The optimism of domestic investors kept the real estate market buoyant, as they continued to show confidence in India's growth story. Although investments reached a five-year low in 2023, Vestian expects a resurgence in 2024 on the back of robust performance of the Indian economy and a healthy pipeline of planned infrastructure developments.”

The consultant stated that factors like a stabilising world economy, strong economic growth in India, a huge domestic consumer base, increasing emphasis on work-from-office policies, and helpful government policies like the National Logistics Policy and Make in India initiatives are needed to lure foreign and domestic investors.

“The Indian real estate sector is rapidly expanding with the emergence of new asset classes and therefore the requirement of funds is also growing. This elevated demand for capital may lead to high returns on investments for investors. In anticipation of high returns, investors may infuse capital into the sector,” Rao added. Notably, institutional investments in real estate touched $6.5 billion in 2019, $5.9 billion in 2020, and $4.8 billion in 2021.