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In the second quarter of 2024, institutional investment in Indian real estate increased significantly to USD 2.52 billion, marking a 20% year-on-year increase. This growth was predominantly driven by booming investments in residential and warehousing sectors, contrasting sharply with a steep decline in office assets. Foreign investors, led by the US and UAE, dominated the landscape, comprising 81% of total investments Regionally. Bengaluru and Delhi-NCR emerged as prime investment destinations. With a strong focus on high-quality industrial facilities and evolving supply chains, the sector is poised for continued expansion, buoyed by rising e-commerce demands and technological advancements.
Institutional investment in Indian real estate increased by 20% year-on-year to USD 2.52 billion in the April-June quarter of 2024, propelled by a significant influx of funds into the warehousing and residential sectors, according to a recent report from real estate consultant Colliers India. This increase highlights the growing confidence of investors in the Indian real estate market, particularly in non-office assets. Advertisement
Colliers India revealed that the total institutional investments in real estate reached USD 2,528.5 million during the second quarter of this year, compared to USD 2,106.4 million in the same period last year. However, the investment landscape showed varied trends across different sectors.
Investment in office assets plummeted dramatically, falling by 83% to USD 329.6 million from USD 1,900.2 million in the corresponding quarter of 2023.
In stark contrast, the residential sector saw a significant uptick in investments, which soared to USD 543.5 million from a mere USD 72.3 million a year earlier.
The industrial and warehousing segment experienced the most remarkable growth, with investments skyrocketing to USD 1,533.1 million from USD 133.9 million in the same quarter of the previous year. This 11-fold increase was fuelled by a few large deals and the rising demand for high-quality Grade A supply and advanced supply-chain models.
The Colliers India report indicated that amidst rising demand for superior quality Grade A supply and evolving supply-chain models, investor confidence in the segment had significantly improved. It also mentioned that with healthy demand momentum, both global and domestic investors were expected to play a prominent role in the consolidation of industrial and warehousing assets in the country.
Foreign investors, predominantly from the US and UAE, accounted for 81% of the total real estate investments during the April-June period of 2024. This substantial foreign interest highlighted the attractiveness of the Indian real estate market on a global scale. Meanwhile, domestic investors also showed increased activity, tripling their investments to USD 0.5 billion compared to the same quarter last year.
Bengaluru and Delhi-NCR emerged as key hotspots for real estate investments, collectively attracting around 23% of the total inflows during the last quarter.
The report suggests that the trend of increased investments in industrial and warehousing projects is likely to continue, driven by the exponential growth of e-commerce and retail consumption in India. The demand for AI-enabled warehouses and micro-fulfilment centres is expected to rise, attracting more asset-level investors in the upcoming quarters.
The second quarter of 2024 has been a landmark period for institutional investments in Indian real estate, with a clear shift towards residential and industrial assets. As investor confidence grows, especially in warehousing and residential sectors, the Indian real estate market is set for sustained growth and development in the near future.
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