2025 is expected to be challenging due to increasing geopolitical friction, a slowdown in the global economy, and elevated inflation levels.
NEW DELHI, Jan 15 (The CONNECT) – Foreign investors dominated institutional investments with 54% share in 2024, accounting for USD 3.7 Bn, says Vestian Research.
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.
Despite a sharp reduction in share from 65% in 2023, investments increased by 36% in value terms. Domestic investors followed the same trend as their share reduced to 30% in 2024 from 35% in the previous year, despite an increase of 36% in value terms during the same period, Vestian reported.
Institutional Investment by Investor Type
| Investor Type | 2024 | 2023 |
| Foreign | 54% | 65% |
| India-dedicated | 30% | 35% |
| Co-investment | 16% | Negligible |
Note: Co-investment refers to joint funding by foreign and domestic investors
Source: Vestian Research
Interestingly, co-investments gained traction in 2024 as foreign investors relied on the local expertise of domestic investors amid prevailing macroeconomic uncertainty. Co-investment accounted for 16% of the total investments received in 2024, registering a 61-fold increase in value.
Shrinivas Rao, CEO, Vestian said, despite a slow start, the real estate sector received significant institutional investments in 2024, surpassing pre-pandemic levels. However, 2025 is expected to be challenging due to increasing geopolitical friction, a slowdown in the global economy, and elevated inflation levels.
RBI is anticipated to reduce the repo rate in 2025, providing impetus to the real estate sector. Heightened real estate activities due to low mortgage rates may attract investors, Rao said.
As per Vestian Research, institutional investments reached USD 6.8 Bn in 2024, registering an annual increase of 61%. However, investments have been on a downward trajectory since 2020 for four consecutive years and resurrected in 2024 owing to a significant inflow of funds in the industrial and warehousing sector on the back of robust demand for e-commerce and quick commerce across the country.
Yearly Institutional Investment Trend
| Year | Institutional Investments (USD Bn) | Y-o-Y Change (%) |
| 2019 | 6.5 | NA |
| 2020 | 5.9 | -9% |
| 2021 | 4.8 | -19% |
| 2022 | 4.9 | 2% |
| 2023 | 4.3 | -12% |
| 2024 | 6.8 | 61% |
Source: Vestian Research
Despite significant investments in the industrial & warehousing sector, commercial assets continued to dominate with 35% share in 2024. However, the share has reduced drastically from 61% in 2023 owing to the global slowdown in IT-ITeS sector. As demand for GCCs is growing in India, office spaces are expected to witness renewed demand.
Institutional Investment by Asset Type
| Asset Type | 2024 | 2023 |
| Residential | 30% | 18% |
| Commercial | 35% | 61% |
| Industrial & Warehousing | 28% | 15% |
| Diversified | 7% | 6% |
Note: Commercial assets include office, retail, co-working, and hospitality projects
Source: Vestian Research
On the other hand, the residential sector reported investments worth USD 2.0 Bn, accounting for 30% of the total investments received in 2024. Investments rose by 171% in 2024 over the previous year. Similarly, the industrial and warehousing sector witnessed an annual increase of 203% with a rise in share from 15% in 2023 to 28% in 2024.
Factors such as return-to-office policies, government initiatives like the Production Linked Incentive (PLI) scheme, and increased focus on affordable housing are anticipated to drive real estate demand in the coming years. This may attract investors, leading to increased investor participation, Rao added.
