Institutional investment in Indian real estate reached $2.5 billion in Q2

Private equity investments in the Indian real estate sector hit a three-year high in the second quarter of this year, totalling $2.5 billion, according to the latest report from real estate consulting firm Colliers.

The report highlights that the industrial and warehousing segment captured the largest share, accounting for 61% of total investments at $1.5 billion. This was followed by the residential segment, which saw a 7.5-fold increase compared to Q2 2023, securing a 21% share of total institutional inflows into Indian real estate. In contrast, office assets experienced subdued activity in Q2 2024, with an 83% year-on-year decline, although the quarter-on-quarter drop was a more moderate 41%.

The quarter also saw increased foreign investment, primarily led by investors from the US and UAE, including Maple Tree, ADIA, GIC, and Xander, which collectively held an 81% share.

Institutional investments in the industrial and warehousing segment surged 11-fold in Q2 2024 compared to Q2 2023, driven by select large transactions. The growing demand for high-quality Grade A supply and evolving supply-chain models has significantly boosted investor confidence in this segment.

With India’s Manufacturing Purchasing Managers’ (PMI) Index hovering near 60.0 in recent months, investor confidence in the industrial and warehousing sector is expected to remain strong throughout 2024. Moreover, strategic infrastructure projects such as the Dedicated Freight Corridors (DFCs) and Bharatmala, along with robust government policies like the National Logistics Policy, underscore significant long-term growth opportunities for the industrial and warehousing segment in India.

During Q2 2024, multi-city deals constituted 72% of investment inflows, according to Colliers. Bengaluru and Delhi NCR together attracted 23% of total inflows, mainly from foreign investments. In Bengaluru, 56% of the inflows were directed towards residential assets, followed by the office segment. Additionally, Delhi NCR saw substantial investments in the office segment, resulting in an 86% year-over-year increase in investment inflows during Q2 2024.

The Indian real estate sector is expected to witness greater diversification of its capital base due to increased participation from domestic institutional and retail investors. Despite global economic slowdowns and current inflation and interest rate trends, international investment firms are anticipated to maintain strong interest in investing in India.

Source: The Economic Times