Total investments increase by 120% in 2023
Says the Westian report
Organizational investments by domestic investors have multiplied twice in the real estate sector during 2023 to cross the $1.5 billion mark, according to the latest report released by The Westian.
The report indicates that the investments, compared to the investments made in 2022, grew by at least 120%.
Of the total quantum of investments, domestic investors’ share increased to 35% from 14%. On account of the slow pace of economic growth, overseas investors’ shares have come down this year to 65% compared to last year’s 79%. Their share in the industrial warehouses was set at 15% only. The share of overseas investments in commercial assets was put at 72%, the report said.
Investments in commercial assets—office space, retail space, co-working space, and hospitality projects—became the priority investments for domestic investors. In fact, 42% of the investments have been made in commercial properties, while 39% have been made in residential projects.
In spite of the prevailing uncertainty in the real estate sector, the impact of the investments has been strong all through the year. The real estate market is buoyant because of the optimism and credibility of domestic investors in the growth of the Indian economy, according to FRICS CEO Srinivasa Rao.
The use of new instruments in the banking sector (AIF, REIT, and INVIT) has contributed to the expansion of activities in allied sectors of the real estate sector.
According to the RBI data, the quantum of loans advanced to the commercial real estate sector has increased by 38 percent compared to the availability of loans to the sector earlier. Dues payable to the banks in the domestic sector have increased by 37%. This aside, the organizational investments in the real estate sector this year have come down by 12% to cross the $4.3 billion mark.
Aggregate investment is likely to pick up again in 2024, despite falling to a five-year low on the back of foreign investor sentiment amid international macroeconomic uncertainty.
Strong performance of the Indian economy, projected growth, planned infrastructural development, stabilization of the global economy, huge domestic consumer base, growing preference for work from office, and favorable government policies like the National Logistics Policy and Make-in-India are the major factors that attract domestic and foreign investors, according to Srinivasa Rao.
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