Indian real estate in 2023 saw highest investment inflows since 2020

The leading sources of foreign capital in Indian real estate were Canada and Singapore accounting for 78% of the total inflows

In 2023, Indian real estate witnessed the highest level of investment inflows since 2020, according to real estate consultancy Colliers. These inflows in 2023 were $5.4 billion, 10 per cent higher as compared to 2022. In the sector, the office sector continued to be the most significant contributor for 2023 with a 56 per cent share in total inflows.

The leading sources of foreign capital in Indian real estate were Canada and Singapore. These two countries accounted for 78 per cent of the global real estate inflows into India during 2023. Moreover, inflows from Asia-Pacific countries have been rising every year and have surged to 3.6 times in 2023 compared to 2020.

 

"Investors continue to view India favourably, owing to strong economic performance, improved regulatory framework, and sustained demand across various real estate segments," it said.

However, inflows from the US have witnessed a drop in 2023 as compared to 2020.

In 2023, India also witnessed the highest allocation towards office space. It accounted for $3 billion out of the total $5.4 billion investments in the sector.

"As 2023 witnessed record-breaking office space leasing activity, global institutional investors remained committed to building office portfolios in India. Office-led investments had a commanding 56 per cent share in total real estate inflows in 2023. Along with envisaged momentum in alternative assets, industrial & warehousing, and residential sectors in the next few quarters, the office sector will continue to dictate India's real estate investment ecosystem," said Vimal Nadar, senior director and head of research, Colliers India.

The second-highest inflows were witnessed in the industrial and warehousing asset class. As compared to $421.8 million in 2022, the inflows in the segment were up 108 per cent in 2023 at $877.6 million. This has been attributed to the expansion of the industrial sector, thriving on heightened consumption levels.

"With micro-fulfilment centres, dark stores and AI-driven supply chains becoming an integral part of the industrial & warehousing segment, foreign investments in the sector are expected to rise multi-fold in the next few years," Colliers said.

The third-highest allocations were made towards the residential asset class. At $788-9 million in 2023, the inflows were 20 per cent higher as compared to $655.6 million in 2022.

"Looking ahead to 2024, investment activity is likely to remain unabated backed by robust domestic economic fundamentals, while a strategic integration of technology and Environmental, Social, and corporate governance will play out in investment decisions," said Piyush Gupta, managing director (Capital Markets & Investment Services), Colliers India.