Vestian, a commercial real estate consultant based in Bengaluru, has published its investment report “Institutional Investment in Indian Real Estate Q2 2023”.
The report states that the Indian real estate sector has demonstrated remarkable resilience in the face of market uncertainty, witnessing a surge in institutional investments during the second quarter of 2023. As per Vestian Research, institutional investments reached USD 1.6 Bn during Q2 2023, marking a substantial 33.3% increase from the previous quarter. However, institutional investments witnessed a dip of 40.7% Y-o-Y, depicting a certain level of volatility in the market.
| Quarters | Institutional Investments (USD Bn) | Q-o-Q Change (%) | Y-o-Y Change (%) |
| Q2 2022 | 2.7 | 98% | 81% |
| Q3 2022 | 0.4 | -86% | -53% |
| Q4 2022 | 1.5 | 316% | 103% |
| Q1 2023 | 1.2 | -19% | -9% |
| Q2 2023 | 1.6 | 29% | -41% |
| Source: Vestian Research | |||
| Commercial assets (office space, co-working, retail, and hotels) accounted for 88% of total investments during Q2 2023. | |||
| Around 92% of total investments during Q2 2023 were from foreign investors. | |||
Shrinivas Rao, FRICS, CEO, Vestian said, “Institutional investments have grown significantly during Q2 2023 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 GDP growth and a strong pipeline of upcoming infrastructure developments.”
Investments in commercial assets (office, retail, co-working, and hospitality projects) surged to 88% in Q2 2023 from 39% in Q1 2023, indicating a renewed demand for office spaces. In contrast, the share of residential sector declined from 27% in Q1 2023 to a mere 4% in Q2 2023, as lower-yielding investments found less appeal with institutional investors.
| Asset-wise Institutional Investments (USD Mn) | |||||
| Asset Class | Q2 2022 | Q1 2023 | Q2 2023 | Q-o-Q Change (%) | Y-o-Y Change (%) |
| Commercial | 697 | 485 | 1,400 | 189% | 101% |
| Residential | 738 | 338 | 58 | -83% | -92% |
| Industrial & Warehousing | 1,000 | 216 | 134 | -38% | -87% |
| Diversified | 57 | 200 | – | NA | NA |
| Alternative | 200 | – | – | NA | NA |
| Total | 2,693 | 1,238 | 1,592 | 29% | -41% |
Foreign investors dominated the total institutional investments received during Q2 2023, with 92% share as investors are bullish about India’s growth story. Additionally, majority of the investment deals were multi-city deals, accounting for around 94%.
Shrini further added, “In the midst of global challenges, a surge in foreign institutional investments suggests that India’s real estate sector has a huge upside potential.”
About Vestian:
Vestian is an occupier-focused workplace solutions firm specializing in commercial, residential, industrial, retail and hospitality sectors. Headquartered at Chicago, Vestian has offices across US, India, China, UK, Sri Lanka and the Middle East. Our core strength lies in providing customized innovative solutions that are aligned to the client’s business objectives. Our extensive service portfolio includes Investment & Consultancy Services, Transaction Advisory Services, Project Services, Retail Business Solutions and Integrated Facilities Management Services. Vestian is the only global workplace solutions organization to be certified in both quality management systems and environmental health & safety standards such as ISO 9001, ISO 14001, ISO 45001 and ISO 37001.
For further information on the company, you can visit us at www.vestian.com