Institutional investments in the residential segment up 71% Y-o-Y during July- September: Vestian

 by Priya Jadhav

New Delhi, 26^th Oct: Residential assets attracted USD 298.3 million of institutional investments during the July-September period, up 71 per cent from the year-ago period, according to real estate consultant Vestian. Institutional investments in residential assets stood at USD 174.3 million in the year-ago period.

Institutional Investment by Asset Type
Asset Type	Q3 2022 (USD Mn)	Q3 2023 (USD Mn)	Q3 2022 (% share)	Q3 2023 (% share)	Y-O-Y % Changes (Q3 2023 vs Q3 2022)
Residential	174.3	298.3	47%	44%	71%
Commercial	150	164.1	40%	24%	9.4%
Industrial & Warehousing	0	190.3	0%	28%	_
Diversified	50	27.2	13%	4%	-46%
Source: Vestian Research

Note: Commercial assets include office, retail, co-working, and hospitality projects.

Overall, the Indian real estate sector received institutional investments worth USD 679.9 million during the third quarter of 2023, up 82 per cent from the same period last year when inflow was USD 374.3 million.

Quarters	Institutional Investments (USD Bn)	Q-o-Q Change (%)	Y-o-Y Change (%)
Q3 2022	0.4	-86%	-53%
Q4 2022	1.5	316%	103%
Q1 2023	1.2	-19%	-9%
Q2 2023	1.6	28%	-41%
Q3 2023	0.7	-57%	84%

Source: Vestian Research

The share of domestic investors accounted for 71% of total institutional investments received in Q3 2023. On the other hand, the share of foreign investors reduced to 27 per cent in Q3 2023 from 55 per cent in Q3 2022. However, the total institutional inflow in the July-September period fell 57 per cent when compared to the previous quarter due to a significant decline in foreign fund inflow.

Commenting on the report, Vestian CEO Shrinivas Rao said, “Institutional investments have slowed down during the September quarter due to limited interest from foreign investors amid a challenging global macroeconomic landscape." However, Rao noted that large conglomerates are calling their employees back to the office which may inflate demand for office spaces across the country.

"As a result, upcoming quarters may witness increased investments on the back of this renewed demand from the office sector," he observed.

Across various asset class, residential sector attracted the highest institutional investments during the third quarter of this calendar year, although the share has reduced to 44 per cent in Q3 2023 from 47 per cent a year earlier.

Share of commercial assets (office space, co-working, retail, and hotels) declined to 24 per cent in Q3 2023 from 40 per cent in Q3 2022.

Office assets attracted USD 164.1 million worth of institutional investments during July-September as against USD 150 million in the year-ago period.

On the other hand, share for the industrial and warehousing sector increased significantly to 28 per cent in Q3 2023 from a negligible share in Q3 2022.

The Government’s push for the ‘Make in India’ campaign and growing popularity of e-commerce resulted in increased demand for industrial spaces and warehouses across the country, Vestian said. "This led to significant interest from large investors."