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Private equity investments in India's real estate sector reached USD 4.3 billion in 2024, a 10% year-on-year growth, according to Savills India. Foreign institutional investors drove the majority of this growth, contributing 88% of the inflows. The industrial and logistics segment emerged as the primary beneficiary, securing USD 2.3 billion, or 54% of the total investment. Other sectors, including residential and alternative investments like data centres, are also gaining traction. Savills anticipates investments to grow further in 2025, projected to hit USD 4.5-5 billion.
India's real estate sector has become an increasingly attractive destination for private equity investments, with 2024 marking another year of growth. According to Savills India, a global property consultancy, private equity inflows in 2024 reached USD 4.3 billion (approximately INR 356 billion), representing a 10% increase from the previous year. This upward trend follows a recovery from the pandemic-induced slump that affected the sector in 2020 and 2021. For context, investments in 2023 stood at USD 4 billion, reflecting a strong rebound from the dip during the pandemic years. Advertisement
Foreign institutional investors (FIIs) continued to dominate the sector in 2024, accounting for 88% of the total private equity inflows. This sustained interest highlights India's growing appeal as a hub for real estate investments. Despite global uncertainties and market fluctuations, FIIs have maintained a firm belief in India's long-term growth potential.
Savills India forecasts that private equity investments will rise further in 2025, with expected inflows between USD 4.5 and USD 5 billion. The positive growth trajectory is supported by India's economic recovery, the expansion of the middle class, and increasing urbanisation, all of which contribute to a growing demand for real estate assets.
The industrial and logistics sector has emerged as the clear leader in attracting private equity. In 2024, it drew USD 2.3 billion (approximately INR 194 billion), accounting for 54% of the total investments. This growth has been largely driven by the rapid expansion of e-commerce in India, which has created a greater need for logistics infrastructure and distribution centres. Additionally, the increasing demand for efficient supply chains has made industrial real estate a key focus for investors. In fact, this sector's strong performance in 2024 builds on a surge in logistics investments seen in 2023, which amounted to around USD 2 billion.
Although the office sector saw a decline in its share of investments in 2024, it has shown resilience. The gradual return to physical workplaces, as the pandemic's effects continue to wane, has led to higher office space absorption rates. This suggests that the office market is bouncing back, albeit more slowly than industrial and residential sectors. Notably, in 2023, office space leasing activities saw a 15% increase, signalling a rebound from the low demand during the height of the pandemic in 2021.
The residential sector has also been gaining momentum, particularly in the premium housing segment. With rising disposable incomes, growing urbanisation, and changing lifestyles, there has been an increased demand for high-end residential properties. The luxury housing market in cities like Mumbai, Delhi, and Bengaluru saw a significant uptick in sales in 2023, with transactions rising by over 10% from the previous year.
In addition to the traditional sectors, alternative investments like data centres and life sciences real estate are also becoming increasingly attractive to private equity investors. As digital infrastructure continues to expand and India's healthcare sector grows, these alternative sectors are poised for further investment. The increasing adoption of cloud computing and data-driven technologies is expected to drive further growth in data centres, while the life sciences sector stands to benefit from India's rising prominence in biotechnology and pharmaceuticals.
A key trend highlighted in the report is the growing influence of Alternative Investment Funds (AIFs). These funds are transforming the investment landscape, providing greater access to capital and enabling investors to explore emerging sectors. AIFs are expected to play a pivotal role in promoting diversification within the Indian real estate market, allowing capital to flow into non-traditional sectors. This shift is already evident, as a growing number of AIFs have begun to target emerging opportunities in areas such as data centres, life sciences, and even co-living spaces.
India's real estate market continues to be a strong performer in the global investment landscape, with private equity inflows steadily rising each year. The industrial and logistics sectors remain the top beneficiaries, while residential and alternative sectors are gaining increasing attention. The role of foreign institutional investors is central to this growth, and projections for 2025 suggest the sector will continue to attract substantial capital. The rise of AIFs is set to further diversify the market, creating new investment opportunities and shifting the focus to emerging sectors. As India's economy continues to grow, its real estate sector will likely remain a key area for investment in the years to come.
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