Foreign Funds Shy Away from Indian Real Estate, Invest Only $11 Million in Jan-Mar: Vestian Report
Institutional investments in the Indian real estate sector witnessed a significant decline in the first quarter of 2024, with foreign funds displaying caution amidst global uncertainties, according to a recent report by Vestian. The report highlights key trends and insights into the investment landscape within the real estate sector during the January-March period.
In contrast to the robust inflow of $1.23 billion in the same period of the previous year, institutional investments plummeted to just $552 million, marking a staggering 55% decline. Notably, foreign investors contributed merely $11 million to the sector, a stark contrast to the $791.4 million injected during the corresponding quarter of the previous year.
On the domestic front, investors displayed resilience, with investments totaling $541.1 million, reflecting a 21% increase from the previous year's $446.9 million. This bullish sentiment among domestic investors underscores confidence in India's growth trajectory despite global economic uncertainties and geopolitical tensions.
Commercial assets, including office spaces, retail outlets, co-working spaces, and hospitality projects, attracted the highest investments amounting to $231.6 million. However, this figure represents a notable decrease from the $484.8 million recorded in the previous year.
Residential assets experienced a decline in institutional investments, dropping by 33% to $225 million from $337.7 million in the previous year. Similarly, investments in the industrial and warehousing sector saw a significant downturn, plummeting by 73% to $58.9 million from $215.8 million in the previous year.
The geographical distribution of investments saw Bengaluru emerging as the top destination, attracting $299 million, followed by Delhi-NCR with $110 million. Together, these two cities accounted for approximately 74% of the total investments in the quarter.
Edelweiss Capital emerged as the most active investor during the period, deploying over $300 million across various asset classes and geographies.
Looking ahead, Vestian CEO Shrinivas Rao remains optimistic about the sector's prospects, anticipating increased investments in the coming months driven by a strengthened economic outlook and robust demand.
The report underscores the resilience of domestic investors amidst global uncertainties while highlighting the cautious stance adopted by foreign investors. Despite challenges, the Indian real estate sector continues to present opportunities for growth and investment, supported by favorable economic fundamentals and evolving market dynamics.
