In 2023, the inflow of foreign funds into the Indian real estate sector witnessed a 30% decline, totaling USD 2.73 billion, as per data from real estate consultant Vestian. However, investments from domestic players surged by over two times, reaching USD 1.51 billion, a 120% increase from the previous year. Overall institutional investments in real estate saw a 12% decrease to USD 4.3 billion in 2023, compared to USD 4.9 billion in the preceding year.
Vestian noted that the cautious approach of foreign funds contributed to the annual decline in their investments, while confidence among domestic investors led to a substantial rise in their contributions. Domestic investors injected USD 1.51 billion in 2023, up from USD 687 million in 2022. On the other hand, foreign fund inflow dropped to USD 2.73 billion in 2023, down from USD 3.926 billion in 2022.
Consequently, the share of domestic investors increased from 14% in 2022 to 35% in 2023. Despite a five-year low in investments during 2023, Vestian anticipates a rebound in 2024, supported by the strong performance of the Indian economy and a robust pipeline of planned infrastructure projects.
Vestian’s CEO, Shrinivas Rao, highlighted the resilience of investments throughout the year, driven by the optimism of domestic investors who continued to express confidence in India’s growth story. The real estate sector in India is expanding rapidly with the emergence of new asset classes, leading to a growing need for funds. Rao believes this heightened demand for capital could result in attractive returns for investors, leading to increased capital infusion into the sector. The stabilizing world economy, robust economic growth in India, a large domestic consumer base, emphasis on remote work policies, and favorable government initiatives are expected to attract both foreign and domestic investors to participate actively in India’s growth journey.
