A recent report from CBRE South Asia Pvt. Ltd. reveals a remarkable surge in equity investments within the real estate sector, showcasing a 46% year-over-year increase. From January to September 2024, these investments reached an impressive USD 8.9 billion, marking the highest level recorded since the calendar year 2018 and surpassing the USD 7.4 billion in total equity investments for the entire year of 2023. For the third quarter of 2024 (July to September), equity investments amounted to USD 2.6 billion.
Domestic investors, primarily real estate developers, have taken the lead in this investment surge, comprising approximately 79% of the total equity capital inflows during the July-September 2024 period. In terms of foreign capital, investors from Singapore represented nearly 73% of the total, while those from the United States contributed about 22%. The third quarter of 2024 also saw an uptick in developer activity, which accounted for nearly 47% of total equity investments, with institutional and collective vehicle investors following closely behind at around 36%.
Geographically, Mumbai emerged as the frontrunner in equity investment activity during the July-September 2024 quarter, closely followed by Bengaluru and Chennai. Together, these three metropolitan areas represented over 66% of total investments in this timeframe. Investors are anticipated to maintain their focus on directing equity inflows toward metropolitan and tier-I cities. However, recent regulations from SEBI regarding the SM REIT framework suggest that there are investment opportunities available in high-quality, albeit smaller, assets located in tier-II cities.
In terms of investment types, land and development sites dominated, accounting for 45% of total investments, while the office sector captured 24% of the market. Additionally, the retail sector saw a notable revival, attracting approximately 22% of capital inflows in the same quarter. Notably, around 56% of the capital allocated for site and land acquisitions was directed toward residential developments, with the remaining funds earmarked for the construction of retail spaces, data centers, warehouses, hospitals, and other projects.
In conjunction with the USD 2.6 billion investment infusion during the July-September 2024 quarter, new investment and development platforms amounting to approximately USD 235 million were established across the hotel and residential sectors.
Equity investments in real estate encompass contributions from a wide array of sources, including private equity funds, pension funds, sovereign wealth funds, institutional investors, real estate developers, investment banks, corporate groups, and Real Estate Investment Trusts (REITs), among others.
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