Investing in tomorrow

India's resilience in the face of global economic headwinds became evident as the real estate sector attracted over USD5.8 bn institutional investments across 53 deals in 2023, a 14% increase compared to 2022.

In 2023, the largest contributors were foreign institutional investors with 63% share of the total investments. Americas, the conventional highest contributors in investments witnessed a significant dip to 23% share of investments compared to the high of 43% share in 2022. However, the market witnessed a significant increase in investments from domestic domiciled investors – 37% compared to an average of 19% in the previous 5 years.

Equity continued to dominate investments in real estate at 81% share of the total investments. In 2023, non-core assets led transaction volumes at 53% of the overall volumes, thus indicating a higher risk appetite and a focus on potentially higher returns by investors.

The office sector continued to lead by a huge margin, at 52% share in the investment pie, followed by residential and warehousing at 16% and 13% respectively. Capital flow in the office sector witnessed an increase by 61% - from $1.8 bn 2022 to $3 bn across 15 deals in 2023. According to the report, the office sector will continue to be the favoured sector in 2024. However, newer sectors like warehousing, data centres, student housing etc. will attract a major share of institutional investments in the years to come.

Additionally, 2023 witnessed the announcement of USD2.8 bn of platform commitments to be invested over the next few years. There was a significant dip (38%) in platform commitments as compared to 2022, which had witnessed the highest growth of platform deals- 174% increase from 2021.

The introduction of REITs in India has opened additional avenues for real estate companies and investors to access public markets - offering liquidity and a regulated investment structure.

Overall, the Indian government's efforts to boost infrastructure development and implement structural reforms have supported the country's growth trajectory. Market experts anticipate this growth continuing in the future and result in positive sentiments amongst investors in the India growth story. The private equity investment outlook in the Indian real estate sector has shown positive trends in recent years and is expected to remain strong in the foreseeable future.

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