Institutional investment in Indian real estate touched $2.52 billion in the April to June quarter of 2024 up by 20% from $2106.4 million in the same period last year, a report by Colliers India has said.
As per the data, investments in office assets declined 83% to $329.6 million from $1,900.2 million.
With $0.3 billion of investments in office assets, the segment witnessed subdued activity in Q2 2024. Although the annual decline was significant at 83%, the QoQ drop was relatively modest at 41%, the report showed.
The industrial and warehousing segment accounted for the highest share of 61% of total investments, at $1.5 billion, led by select large deals in the segment. The residential segment also witnessed a significant rise in quarterly inflows, 7.5X times compared to Q2 2023, capturing a 21% share of total institutional inflows into Indian real estate, it showed.
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The surge in industrial, warehousing, and residential investments resulted in a healthy investment volume of $3.5 billion for H1 2024 at an overall level, making up for the slow start in the first quarter. Amidst a significant spurt in e-commerce and retail consumption in India, various asset-level investors are likely to enter the market, boosting the demand for AI enabled warehouses and micro-fulfilment centers in the upcoming quarters, the report noted.
Foreign investments remained robust, accounting for 81% of the total inflows in Q2 2024, predominantly led by investors from the US and UAE, the report said.
Bengaluru and Delhi-NCR together drove about 23% of the quarterly inflows
While at 72% share, multi-city deals continued to drive majority of the investment inflows during Q2 2024, Bengaluru and Delhi NCR together corresponded to about 23% of the total inflows during the quarter driven by foreign investments. About 56% of the quarterly inflows in Bengaluru were directed towards residential assets, followed by the office segment.
Investments in the office segment were particularly strong in Delhi-NCR. Led by inflows into the office segment, Delhi NCR witnessed about 86% YoY rise in investment inflows during Q2 2024.
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“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.
Sustained growth in FDI and domestic capital in real estate reciprocates the attractiveness and the positive long-term outlook for infrastructure, construction, and real estate in India. The domestic institutional and retail investor activity in Indian real estate is also expected to remain strong in the second half of the year, driven by healthy economic activity and consumer confidence, said Gupta.
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“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 is 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 in throughout 2024,” said Vimal Nadar, senior director and head of research, Colliers India.
