Institutional Housing Investment Slumps 39% in First Nine Months

Institutional investors have withdrawn substantially from India's residential sector, with investments falling 39 per cent year-on-year to USD 694.5 million in the first nine months of 2024, down from USD 1,139.7 million in the corresponding period last year. Real estate developers are increasingly relying on internal accruals to fund housing projects rather than seeking external institutional capital, signalling a strategic shift in project financing across the sector.

The residential slowdown stands in sharp contrast to other segments of India's real estate market. Office assets attracted 46 per cent more institutional investment, reaching USD 2,169.3 million compared to USD 1,482.7 million a year earlier, while industrial and logistics parks recorded 15 per cent growth to USD 371.9 million from USD 324.7 million. Mixed-use developments also showed resilience, with institutional investments climbing 42 per cent during the period.

Retail real estate suffered the steepest decline, with institutional investment in shopping malls plummeting 78 per cent to USD 85.2 million from USD 380 million. The divergent investment patterns across segments underscore shifting institutional preferences towards commercial and logistics assets, which have demonstrated stronger rental yields and growth prospects compared to the residential market.