Indian real estate saw a remarkable boost in institutional investment in the second quarter of 2024, achieving USD 2.5 billion in inflows—the highest quarterly figure since 2021. This surge was driven primarily by the industrial and warehousing segment, which accounted for 61 per cent of the total investments, equating to USD 1.5 billion. This growth was supported by several large deals within the sector. The residential segment also saw significant growth, with a 7.5-fold increase in quarterly inflows compared to Q2 2023, capturing a 21 per cent share of the total institutional inflows.
"Driven by foreign investments, the industrial & warehousing segment witnessed about half of the total inflows in the first half of 2024. Institutional investments in this segment for H1 2024 are nearly double the total inflows for the entire year of 2023. With India's Manufacturing Purchasing Managers' Index (PMI) staying close to 60.0 in recent months, investor confidence in the industrial & warehousing segment is expected to remain strong throughout 2024," said Vimal Nadar, Senior Director and Head of Research, Colliers India.
Conversely, the office segment experienced subdued activity, with only USD 0.3 billion in investments. This represents an 83 per cent year-on-year decline, although the quarter-on-quarter drop was a more modest 41 per cent. Despite the sluggish performance in the office segment, the robust investments in industrial and warehousing, along with residential sectors, contributed to a healthy overall investment volume of USD 3.5 billion for the first half of 2024, compensating for the slow start in Q1.
Foreign investments remained a critical driver, constituting 81 per cent of the total inflows in Q2 2024, with significant contributions from investors in the US and UAE.
"Private equity investments in Indian real estate have demonstrated remarkable resilience and strength in the first half of the year, reaching USD 3.5 billion and reflecting robust market confidence. With foreign investments leading the charge at a significant 73 per cent share in H1 2024, the sustained momentum is expected to drive positive sentiment for the entire year," said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. He added that the domestic institutional and retail investor activity is expected to remain strong in the second half of the year, driven by healthy economic activity and consumer confidence.
Industrial and Warehousing Investments Surge 11-Fold
During Q2 2024, the industrial and warehousing segment saw a dramatic increase in institutional investments, rising 11-fold compared to Q2 2023. This surge was driven by several large deals within the segment. The rising demand for high-quality Grade A supply and evolving supply-chain models have bolstered investor confidence in this sector. The growing e-commerce and retail consumption in India is expected to attract various asset-level investors, boosting the demand for AI-enabled warehouses and micro-fulfillment centers in the upcoming quarters.
In Q2 2024, the quarterly investment inflows across various asset classes exhibited significant fluctuations. Office investments plummeted to USD 329.6 million, marking an 83 per cent year-on-year decline and a 41 per cent quarter-on-quarter decrease. Conversely, residential investments surged to USD 543.5 million, reflecting a remarkable 652 per cent year-on-year increase and a 430 per cent rise from the previous quarter. Investment in alternate assets was nonexistent in Q2 2024, following a USD 21.0 million inflow in Q1 2024, resulting in a 100 per cent quarter-on-quarter drop.
The industrial and warehousing sector saw the most dramatic growth, with investments soaring to USD 1,533.1 million, a staggering 1045 per cent increase year-on-year and a 763 per cent jump from the previous quarter. Mixed-use assets experienced a slight decline to USD 122.3 million, down by 6 per cent quarter-on-quarter. Retail investments remained absent throughout the periods considered. Overall, the total investment inflows for Q2 2024 amounted to USD 2,528.5 million, indicating a 20 per cent year-on-year growth and a significant 154 per cent rise from Q1 2024. These insights are based on data from Colliers.
In Q2 2024, the quarterly investment inflows across various asset classes exhibited significant fluctuations. Office investments plummeted to USD 329.6 million, marking an 83 per cent year-on-year decline and a 41 per cent quarter-on-quarter decrease. Conversely, residential investments surged to USD 543.5 million, reflecting a remarkable 652 per cent year-on-year increase and a 430 per cent rise from the previous quarter. Investment in alternate assets was nonexistent in Q2 2024, following a USD 21.0 million inflow in Q1 2024, resulting in a 100 per cent quarter-on-quarter drop.
The industrial and warehousing sector saw the most dramatic growth, with investments soaring to USD 1,533.1 million, a staggering 1045 per cent increase year-on-year and a 763 per cent jump from the previous quarter. Mixed-use assets experienced a slight decline to USD 122.3 million, down by 6 per cent quarter-on-quarter. Retail investments remained absent throughout the periods considered. Overall, the total investment inflows for Q2 2024 amounted to USD 2,528.5 million, indicating a 20 per cent year-on-year growth and a significant 154 per cent rise from Q1 2024. These insights are based on data from Colliers.
Bengaluru and Delhi NCR Lead Regional Investment Inflows
While multi-city deals accounted for the majority of investment inflows during Q2 2024 with a 72 per cent share, Bengaluru and Delhi NCR together captured about 23 per cent of the total inflows, driven largely by foreign investments. In Bengaluru, 56 per cent of the quarterly inflows were directed towards residential assets, followed by the office segment. Meanwhile, investments in the office segment led to an 86 per cent year-on-year rise in investment inflows in Delhi NCR during Q2 2024.
In Q2 2024, several significant private equity deals were recorded, showcasing substantial investments across various asset classes and cities. ADIA and KKR jointly invested USD 1,500 million in Reliance Retail Ventures Ltd, targeting the industrial and warehousing sector across multiple cities. Mapletree made a notable investment of USD 229.0 million in Adarsh Developers, focusing on the residential sector in Bengaluru. Additionally, an Edelweiss Alternatives managed fund invested USD 180.0 million in MMTP Projects, directed towards office assets in Bengaluru. These strategic investments highlight the robust activity within the private equity space during the quarter, as reported by Colliers.
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