In the second quarter of 2024, private equity investments in India’s real estate sector surged to a three-year peak, totaling US$ 2.5 billion, as per a recent report from Colliers, a leading real estate consultancy. The industrial and warehousing sector spearheaded the investments, accounting for 61% of the total amounting to $1.5 billion. This sector witnessed an eleven-fold increase compared to the same period in 2023. Simultaneously, the residential segment also saw significant growth, marking a 7.5 times rise year-on-year and securing a 21% share of institutional investments in Indian real estate.
Conversely, office assets experienced subdued activity with an 83% annual decline, although the quarter-on-quarter drop was more moderate at 41%. Vikas Chimakurthy, CEO of Kotak Realty Fund, attributed the heightened interest in residential properties to increased developer land acquisitions, attracting substantial capital. In contrast, the office space sector faced reduced investment due to saturation in high-quality income-generating assets.
Foreign investors, particularly from the US and UAE, played a pivotal role, with entities like Maple Tree, ADIA, GIC, and Xander collectively holding an 81% stake. The industrial and warehousing segment benefited from strong investor sentiment, driven by significant deals and an uptick in demand for ‘Grade A’ supply to support evolving supply-chain models, as highlighted by Rajesh Jaggi, Vice Chairman – Real Estate at The Everstone Group.
India’s Manufacturing PMI Index near 60.0 and strategic infrastructure projects such as Dedicated Freight Corridors and Bharatmala underscored the favorable long-term prospects in industrial and logistics real estate. Multi-city transactions dominated investment inflows, with Bengaluru and Delhi NCR collectively attracting 23% of total investments during the quarter. Despite global economic slowdown and fluctuating inflation and interest rates, the Indian real estate sector is poised for diversified capital inflows, bolstered by increasing participation from domestic institutional and retail investors.
