Real Estate Market Downturn: Institutional Investments Drop 41% In Q2, Says Report

Institutional investments in real estate sector fell 41 per cent year-on-year to USD 1.6 billion in the June quarter but increased 33 per cent sequentially, according to property consultant Vestian. Foreign investors dominated the total institutional investments received during the second quarter (Q2) of the calendar year 2023 (CY23), with 92 per cent share as investors are bullish about India’s growth story, Bengaluru-based Vestian said in a statement on Tuesday.

Institutional investments in real estate stood at USD 2.7 billion during the June quarter last year and USD 1.2 billion in the January-March period this year. Vestian noted that the Indian real estate sector has demonstrated remarkable resilience in the face of market uncertainty, witnessing a surge in institutional investments during Q2, CY23 as compared to the previous quarter.

“Institutional investments reached USD 1.6 billion during Q2, marking a substantial 33.3 per cent increase from the previous quarter. However, institutional investments witnessed a dip of 40.7 per cent year-on-year, depicting a certain level of volatility in the market,” according to Vestian’s report. Vestian Chief Executive Officer Shrinivas Rao said institutional investments have grown significantly during the quarter compared to the previous quarter.

“This upward trajectory in investments demonstrates renewed interest from institutional investors amidst the challenging macroeconomic landscape. The real estate sector is likely to garner increased traction in the upcoming quarters on the back of robust Gross Domestic Product (GDP) growth and a strong pipeline of upcoming infrastructure developments,” Rao said. Majority of investments were multi-city deals, accounting for about 94 per cent.

Commercial assets — office space, co-working, retail, and hotels — accounted for 88 per cent of the total investments during the quarter. Commercial assets attracted an investment of USD 1.4 billion during April-June as against USD 697 million in the year-ago period.

Inflow in residential assets plunged from USD 738 million to USD 58 million. Investments in industrial and warehousing assets fell sharply to USD 134 million in April-June this year from USD 1 billion in the year-ago period.

Headquartered in Chicago, Vestian has offices across US, India, China, UK, Sri Lanka and the Middle East.