Institutional investments in real estate down 40 pc to USD 995 million in Jan-Mar: Report

Institutional investments in Indian real estate dropped by 40% to USD 995.1 million in Jan-Mar, with foreign funds contributing 55% and domestic investors 45%. Office investments fell by 38%, residential by 72%, and industrial & warehousing by 18%. Alternate assets saw an 87% decrease while mixed-use projects surged. Hyderabad and Pune led in city investments. Domestic investors are gaining ground in the market.

Institutional investments in real estate fell 40 per cent annually in January-March to USD 995.1 million because of a lower inflow of funds in office, residential, and warehousing assets, according to Colliers India.

The institutional investments stood at USD 1,658.3 million in the year-ago period.

Out of the total institutional investments, real estate consultant Colliers India highlighted that foreign funds contributed 55 per cent while domestic investors 45 per cent.

As per the data, the institutional investments in the office fell 38 per cent to USD 563 million in January-March this year from USD 907.6 million in the corresponding period of the previous year.

The residential segment witnessed a 72 per cent fall in investments to 102.6 million from 361.1 million.

The inflow of funds in industrial & warehousing assets dipped 18 per cent to USD 177.7 million from USD 216.3 million.

Alternate assets, which include data centres, life sciences, senior housing, holiday homes, student housing, and schools among others, attracted just USD 21 million in January-March, a sharp fall of 87 per cent from USD 158.2 million in the year-ago period.

Mixed use projects got a total funding of USD 130.8 million in January-March this year, a significant jump from USD 15.1 million in the corresponding period of the previous year.

Among cities, the share of Hyderabad and Pune stood at 26 per cent each in the total investments while Bengaluru accounted for 20 per cent of the inflow of funds.

Commenting on the report, Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India, said, ''At USD 1 billion, institutional investments into Indian real estate have started on a steady positive note.'' Interestingly, he said that domestic investors are increasingly gaining more ground in Indian real estate.

''Within domestic institutional investments, office and residential assets formed about 66 per cent, reflecting a strategic approach to align with India's growth trends. This also underscores growing confidence of diversified spectrum of investors across multiple investment strategies including credit and acquisitions,'' Gupta said.

In Q1 2024, Colliers India Senior Director and Head of Research said the Asia Pacific region contributed to over 82 per cent of foreign inflows in India's real estate sector.

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