At USD 2.5 Billion, Q2 2024 institutional investment in Indian real estate touches a 3-year high

· Industrial & warehousing led investments in Q2 2024 at 61% share, followed by residential at 21%

· With 81% share, foreign investors drove & dominated Q2 2024 real estate investments

· Domestic investors infused USD 0.5 Bn, 2.8X times compared to Q2 2023 inflows

· Bengaluru and Delhi NCR cumulatively attracted about 23% of the inflows in Q2 2024

Gurgaon, 03 July 2024: After a steady start in Q1 2024, Q2 2024 saw accelerated momentum, registering USD 2.5 billion of inflows—the highest in any quarter since 2021. The industrial & warehousing segment accounted for the highest share of 61% of total investments, at USD 1.5 billion, led by select large deals in the segment. The residential segment also witnessed significant rise in quarterly inflows, 7.5X times compared to Q2 2023, capturing a 21% share of total institutional inflows into Indian real estate. In contrast, with USD 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 surge in industrial & warehousing, and residential investments resulted in a healthy investment volume of USD 3.5 billion for H1 2024 at an overall level, making up for the slow start in first quarter. Foreign investments remained robust, accounting for 81% of the total inflows in Q2 2024, predominantly led by investors from the US and UAE.

“Private equity investments in the Indian real estate have shown remarkable resilience and strength in first half of the year at USD 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. Sustained growth in FDI and Domestic Capital in India 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 second half of the year, driven by healthy economic activity and consumer confidence,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

Quarterly investments in Industrial & warehousing segment surged to 11X times

During Q2 2024, the institutional investments in industrial & warehousing segment rose manifold, 11X times compared to Q2 2023 led by select large deals in the segment. Amidst rising demand for superior quality Grade A supply and evolving supply-chain models, investor confidence in the segment has significantly improved. With healthy demand momentum, global as well domestic investors are going to play a prominent role in consolidation of industrial & warehousing assets in the country. Amidst signficant 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.

Investment inflows (USD million) Q2 2024–

Asset Class

Q2 2023

Q1 2024

Q2 2024

Q2 2024 vs Q2 2023 (% YoY Change)

Q2 2024 vs Q1 2024 (% QoQ change)

Office

1,900.2

563.0

329.6

-83%

-41%

Residential

72.3

102.6

543.5

652%

430%

Alternate assets*

–

21.0

–

–

-100%

Industrial & Warehousing

133.9

177.7

1,533.1

1045%

763%

Mixed use

–

130.8

122.3

–

-6%

Retail

–

–

–

–

–

Total

2,106.4

995.1

2,528.5

20%

154%

*Note: Alternate assets include data centres, life sciences, senior housing, holiday homes, student housing, schools etc

Source: Colliers

Investment inflows (USD million) H1 2024 –

Asset Class

H1 2023

H1 2024

H1 2024 vs H1 2023 (% YoY Change)

Office

2,807.8

892.5

-68%

Residential

433.4

646.2

49%

Alternate assets*

158.2

21.0

-87%

Industrial & Warehousing

350.2

1,710.8

388%

Mixed use

15.1

253.1

1575%

Retail

–

–

–

Total

3,764.7

3,523.6

-6%

*Note: Alternate assets include data centres, life sciences, senior housing, holiday homes, student housing, schools etc

Source: Colliers

“Driven by foreign investments, the industrial & 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 & warehousing segment is likely to remain strong in throughout 2024. Furthermore, strategic infrastructure projects such as Dedicated Freight Corridors (DFCs) & Bharatmala and robust government policies such as National Logistics Policy, underscore substantial long-term growth opportunities for the industrial & warehousing segment in India,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

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.

City wise investment inflows in Q2 2024 –

City

Q2 2023

Q2 2024

Investment share in Q2 2024 (%)

Q2 2024 vs Q2 2023 (%)

H1 2023

H1 2024

Investment share H1 2024 (%)

H1 2024 vs H1 2023 (%)

Bengaluru

–

408.8

16%

–

196.6

612.0

17%

211%

Chennai

85.4

33.1

1%

-61%

85.4

154.1

4%

80%

Delhi NCR

86.7

161.6

7%

86%

467.7

190.8

5%

-59%

Hyderabad

127.3

43.0

2%

-66%

127.4

300.9

9%

136%

Mumbai

348.4

60.6

2%

-83%

389.1

91.3

3%

-77%

Pune

–

4.3

0.2%

–

–

258.3

7%

–

Others/ Multi City

1,458.6

1,817.1

71.8%

25%

2,498.5

1,916.2

55%

-23%

Total

2,106.4

2,528.5

100%

20%

3,764.7

3523.6

100%

-6%

Source: Colliers

Select PE deals in Q2 2024 –

Investor

Investee

Deal Value (in USD million)

City

Asset class

ADIA, KKR

Reliance retail ventures Ltd

1,500

Others/Multi-city

Industrial & warehousing

Mapletree

Adarsh Developers

229.0

Bengaluru

Residential

Edelweiss Alternatives managed fund

MMTP Projects

180.0

Bengaluru

Office

Source: Colliers