Colliers India's report stated that institutional investment in Indian real estate reached $2.52 billion in the second quarter of 2024, marking a 20% increase from the $2106.4 million recorded in the corresponding period of the previous year.
According to the data, investments in office assets declined 83% to $329.6 million from $1,900.2 million.
In Q2 2024, the office assets segment experienced subdued activity despite receiving $0.3 billion in investments. While the annual decrease was substantial at 83%, the quarter-on-quarter decline was relatively modest at 41%, as indicated in the report.
The industrial and warehousing sector represented the largest portion of 61% of overall investments, totaling $1.5 billion, driven by specific major transactions in the sector.
The residential sector also experienced a substantial increase in quarterly inflows, 7.5 times higher than Q2 2023, securing a 21% stake of total institutional inflows into the Indian real estate market.
The increase in industrial, warehousing, and residential investments led to a robust investment total of $3.5 billion for H1 2024 overall, compensating for the sluggish beginning in the initial quarter. With a notable rise in e-commerce and retail spending in India, different asset-level investors are expected to join the market, enhancing the need for AI-equipped warehouses and micro-fulfilment centers in the forthcoming quarters, as stated in the report.
The report indicated that foreign investments continued to be strong, making up 81% of the total inflows in Q2 2024, with a significant contribution from investors based in the US and UAE.
In Q2 2024, multi-city deals remained the primary driver of investment inflows, comprising 72% of the total share. Bengaluru and Delhi NCR collectively accounted for 23% of these inflows, predominantly fueled by foreign investments. Residential assets received the majority share of investment in Bengaluru at 56%, with the office segment following closely behind.
The office segment saw significant investments in Delhi-NCR, resulting in an 86% year-on-year increase in investment inflows during the second quarter of 2024.
The managing director, Capital Markets and Investment Services at Colliers India, Piyush Gupta shares,"Private equity investments in the Indian real estate sector have remained strong in the first half of the year, totaling $3.5 billion. Foreign investments have accounted for 73% of this amount, suggesting a positive market sentiment and outlook for the rest of the year."
The growth in FDI and local capital in India's real estate sector shows promise for infrastructure, construction, and real estate. Domestic investors are expected to remain active due to a strong economy and positive consumer sentiment.
Senior director and head of research, Colliers India,Vimal Nadar mentioned,"In the first half of 2024, about half of the total inflows were invested in the industrial and warehousing sector, with institutional investments nearly doubling compared to 2023. The Manufacturing PMI in India has consistently been around 60.0, showing strong investor confidence in this sector for the rest of 2024."
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