India’s Real Estate Investment Surge: Q2 2024 Insights
Gurugram, 30 July 2024 – The Indian real estate market has witnessed a remarkable resurgence in investment activity during the second quarter of 2024, with inflows reaching an impressive USD 2.77 billion. This figure not only represents a 1.5x growth compared to the previous quarter but also marks a substantial 39% increase year-on-year. According to the latest Capital Market Beat report by Cushman & Wakefield, the total investment for the first half of 2024 has reached a record-breaking USD 3.9 billion, underscoring the growing confidence of investors in the Indian real estate sector.
Delhi-NCR: The Investment Powerhouse
Among the various cities in India, Delhi-NCR has emerged as the frontrunner in attracting private equity investments during Q2 2024. The region recorded inflows of USD 532 million, capturing 19% of the total investment share. This represents a staggering 74% increase compared to the same period last year. The momentum in Delhi-NCR has been primarily driven by the office segment, where major equity buyouts by prominent fund houses have taken place. Additionally, the residential sector, particularly in the high-end and luxury segments, has also seen sustained interest.
In the first half of 2024, Delhi-NCR maintained its leadership position, securing approximately USD 633 million in inflows, which accounted for 16% of the total USD 3.9 billion investment in the sector. Following Delhi-NCR, Bengaluru and Hyderabad also made significant contributions, with investments of USD 509 million (13% share) and USD 320 million (8% share), respectively. Notably, multi-city deals accounted for the remaining 48% of the investments, reflecting a diversified investment strategy across various regions.
Sectoral Breakdown: Logistics & Industrial Leads
The surge in investments during Q2 2024 was predominantly led by the Logistics & Industrial (L&I) sector, which captured an impressive 56% of the total investments, amounting to USD 1.54 billion. This figure is four times higher than the 12-quarter average for the sector, indicating a significant shift in investor focus. The L&I sector’s growth can be attributed to the increasing demand for efficient supply chain solutions and the expansion of e-commerce, which has been further fueled by substantial public investments in infrastructure and multi-modal economic corridors.
Following the L&I sector, the office sector also demonstrated robust performance, attracting USD 924 million in Q2 and USD 1.196 billion in H1 2024. The residential sector, while trailing behind, still showed promise with investments of USD 309 million in Q2 and USD 1.002 billion in H1.
The Role of Foreign Investment
Foreign investors have played a pivotal role in the investment landscape of India’s real estate market, contributing 76.3% of the total investment volume in Q2 2024. A significant portion of these investments has been directed towards the L&I sector, highlighting the global interest in India’s growing logistics capabilities. Notably, deals involving a combination of equity and structured debt constituted 62% of the total inflows, while pure equity infusion deals made up 25%. This trend indicates a strategic approach by investors looking to balance risk and return in a dynamic market.
Economic Indicators and Future Outlook
The macroeconomic environment in India has also been supportive of this investment surge. The manufacturing sector reported a year-on-year growth of 9.9%, while the tertiary sector grew by 7.6% annually. Furthermore, GST collections for June 2024 rose by 8% year-on-year, reflecting robust domestic transaction volumes and consumer confidence.
Somy Thomas, Managing Director of Valuation & Advisory and Capital Markets at Cushman & Wakefield, commented on the impressive inflows, stating, “USD 3.9 billion of private equity inflows during the first half of 2024, already surpassing 70% of last year’s total, highlights the remarkable growth and investor confidence in India’s real estate market. This surge is primarily driven by infrastructure-related sectors like logistics and industrial, fueled by significant public investments in multi-modal economic corridors. Additionally, strong demand for office and residential spaces further solidifies the market’s appeal. With continued positive momentum, we anticipate a buoyant year for private equity investments in the commercial real estate sector, potentially exceeding initial expectations.”
Conclusion
The data from Q2 2024 paints a promising picture for India’s real estate market, characterized by impressive investment inflows and a diversified approach across various sectors and cities. As investor confidence continues to grow, particularly in the Logistics & Industrial sector, the outlook for the remainder of 2024 appears optimistic. With strong economic indicators and a favorable investment climate, India is poised to remain a key player in the global real estate landscape.