Mumbai: India’s real estate sector has witnessed a substantial influx of foreign capital, attracting $3.5 billion in investments during the first half of 2024. This positions India as the third most favored global destination for land and development investments, trailing only behind China and Singapore, according to Colliers’ latest report.
Foreign institutional investors accounted for a significant 73% of the total investments in India’s real estate market, with cross-border inflows exceeding $1.5 billion. The Asia-Pacific (APAC) region alone contributed over $1.2 billion to these investments, as detailed in the ‘Global Capital Flows Report’.
In the initial quarter of 2024, the real estate sector saw foreign investments amounting to $995.1 million, while the second quarter experienced a notable increase, drawing in $2.5 billion.
Sector Trends and Investments
Approximately 70% of the investments in the first half of the year were directed towards ready assets. The report highlights that India’s rapid economic growth and infrastructure enhancements are likely to present increased opportunities in developmental assets in the near future.
The industrial and warehousing sectors emerged as the most dynamic areas of investment. Notably, investments in industrial assets surged nearly fivefold compared to the same period last year. Piyush Gupta, Managing Director of Capital Markets & Investment Services at Colliers India, attributed this investor interest to rising demand from third-party logistics and e-commerce sectors, as well as the strengthening of manufacturing capabilities across key industrial corridors.
Recent reports reveal that several new funds, including Mubadala, Mitsubishi Fudson, PAG Credit & Markets, Cadillac Fairview, Korea Investment Corp, and PNB Malaysia, have been actively exploring opportunities in India’s real estate market. These funds are either expanding existing investments or forming new collaborations.
Luxury Real Estate Boom
India’s luxury real estate sector is also experiencing significant growth. The sector is expected to see a compound annual growth rate (CAGR) of over 5% from 2023 to 2028. Non-resident Indians (NRIs) are increasingly contributing to this boom, having invested $13.1 billion into the luxury real estate market last year. By 2025, NRIs are anticipated to account for 20% of the total real estate investments in India.
APAC Market Trends
Despite India’s strong performance, transaction volumes across the APAC region have declined throughout 2024. While the first quarter maintained a steady pace compared to the previous year, the second quarter witnessed a 29% decrease in transaction volumes compared to 2023. This downturn is largely attributed to a 30% drop in land and development site transactions across APAC, with sales in China experiencing a 40% year-on-year decline.
