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Institutional investment in Indian real estate reached $2.52 billion in the April to June quarter of 2024, marking a 20% increase from $2.106 billion in the same period last year, according to a report by Colliers India.
Decline in Office Asset Investments
The data revealed a significant 83% decline in investments in office assets, dropping to $329.6 million from $1.9 billion. Despite this annual decrease, the quarter-on-quarter decline was a more modest 41%.
Industrial and Warehousing Segment Leads
The industrial and warehousing segment emerged as the leader, accounting for 61% of total investments at $1.5 billion. This surge was driven by a few large deals.
The residential segment also saw substantial growth, with quarterly inflows increasing 7.5 times compared to Q2 2023, capturing 21% of total institutional inflows.
H1 2024 Investment Volume
Overall, the first half of 2024 saw a healthy investment volume of $3.5 billion, compensating for a slow start in the first quarter. The report noted that the rise in e-commerce and retail consumption in India is expected to boost demand for AI-enabled warehouses and micro-fulfilment centers in the coming quarters.
Robust Foreign Investments
Foreign investments remained strong, making up 81% of total inflows in Q2 2024, primarily driven by investors from the US and UAE.
Regional Highlights
Bengaluru and Delhi-NCR: Bengaluru and Delhi-NCR together accounted for 23% of the quarterly inflows. Multi-city deals dominated, representing 72% of the investment inflows during Q2 2024.
In Bengaluru, 56% of the inflows were directed towards residential assets, followed by the office segment. Delhi-NCR saw a notable 86% year-on-year increase in investment inflows, primarily in the office segment.
Expert Insights
“Private equity investments in Indian real estate have shown remarkable resilience and strength in the first half of the year at $3.5 billion, reflecting robust market confidence. With foreign investments leading the charge at a significant 73% share in H1 2024, the sustained momentum is expected to drive positive sentiment for the entire year,” said Piyush Gupta, managing director, Capital Markets and Investment Services at Colliers India.
Future Outlook
Gupta also noted that sustained growth in FDI and domestic capital highlights the attractiveness and positive long-term outlook for infrastructure, construction, and real estate in India. He expects domestic institutional and retail investor activity to remain strong in the second half of the year, driven by healthy economic activity and consumer confidence.
Vimal Nadar, senior director and head of research at Colliers India, commented on the industrial and warehousing segment: “Driven by foreign investments, the industrial and warehousing segment witnessed about half of the total inflows in the first half of 2024. Interestingly, institutional investments in the segment for H1 2024 are almost twice the inflows in the entirety of 2023. With India’s Manufacturing Purchasing Managers’ (PMI) Index staying close to 60.0 in the last few months, investor confidence in the industrial and warehousing segment is likely to remain strong throughout 2024.”
