Institutional investments in the real estate sector experienced a notable downturn, contracting by 37% year-on-year to $822.3 million in the October-December quarter of 2023, as reported by real estate consultancy firm Colliers India. The data sheds light on the changing dynamics of investments across various segments of the real estate market.
Analyzing the Breakdown: Segment-wise Impact
Breaking down the figures, the office segment faced a 23% reduction in fund inflows, recording $135.5 million in the fourth quarter of 2023, compared to $175.5 million in the corresponding period of 2022. Concurrently, investments in residential properties witnessed a substantial 79% decline, contracting to $81 million from $379.1 million a year earlier.
In the alternate asset categories, which encompass data centers, life sciences, senior housing, and more, there was a modest decline of 11%, with investments totaling $418.7 million. Meanwhile, the industrial and warehousing segment experienced a 16% downturn, registering $187.1 million in the last quarter of 2023, down from $222 million in 2022.
Shifts in Investment Patterns: Mixed-Use Projects and Retail Assets
Notably, mixed-use projects failed to attract any institutional investments during the final quarter of 2023, in stark contrast to the $54.9 million garnered during the same period in the previous year. Retail assets also remained devoid of institutional investments throughout 2023, a stark contrast to the $491.8 million recorded in 2022, according to Colliers’ data.
Year-End Overview: Despite Quarterly Decline, 2023 Records Growth
For the entire calendar year of 2023, despite the quarterly decline, institutional investments in real estate expanded by 10% to $5,380.4 million, compared to $4,877.9 million in 2022. The office segment remained a significant contributor, witnessing a 53% surge in investments to $3,022.5 million. Concurrently, residential property investments grew by 20%, reaching $788.9 million in 2023.
In contrast, alternate assets experienced a 25% contraction, attracting $649.1 million, down from $866.7 million the previous year. Furthermore, mixed-use projects saw a drastic 91% decline, securing a mere $42.3 million in 2023 compared to $463.7 million in 2022.
