'Fund inflow in real estate from foreign investors dips 30% to $2.73 bn'

The inflow of funds in Indian real estate from foreign investors fell 30 per cent to $2.73 billion last year, but the influx jumped more than two times from domestic players to $1.51 billion, according to real estate consultant Vestian.

According to Vestian data, the total institutional investments in real estate declined 12 per cent to $4.3 billion in 2023, from $4.9 billion in the previous year.

The consultant highlighted that investments from foreign funds fell 30 per cent annually because of their cautious approach, but rose 120 per cent from domestic investors.

Domestic investors pumped in $1,511 million ($1.5 billion) last year, as against $687 million in the 2022 calendar year.

However, the inflow from foreign funds stood lower at $2,733 million last year, as against $3,926 million in 2022.

Accordingly, the share of domestic investors increased to 35 per cent in 2023 from 14 per cent in 2022.

Shrinivas Rao, CEO of Vestian, said, "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.

"Stabilizing world economy, robust economic growth in India, huge domestic consumer base, growing emphasis on work-from-office policies, and favourable government policies such as National Logistics Policy and Make in India initiatives are likely to attract foreign and domestic investors to actively participate in India's growth story," it added.

Rao said 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 felt.

In 2019, institutional investments in Indian real estate stood at $6.5 billion. The inflow was $5.9 billion in 2020 and $4.8 billion in 2021.