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Institutional investments in Indian real estate touched USD 1.0 Billion in Q1 2024; cues for a positive start

Mumbai, 02 April 2024Institutional investments in Indian real estate sector touched USD 1.0 billion in the first quarter of 2024, signalling a steady and positive start to the year. While this was a 40% drop compared to the same period last year, India’s real estate investments showed improvement on a sequential basis registering 21% QoQ rise. Foreign investments retained their dominance, forming 55% of the total inflows during the quarter. Domestic investments too witnessed a notable rise at 15% YoY in Q1 2024. The share of domestic inflows in overall institutional investments continued to rise to 45% in Q1 2024, compared to 24% in Q1 2023. Apart from the core asset classes such as office, institutional investments in industrial & warehousing and residential segments were noteworthy in the first quarter. The segments received capital inflows to the tune of USD 0.2 billion and USD 0.1 billion respectively in Q1 2024, forming a combined 28% of the total investments.

“At USD 1 billion, institutional investments into Indian real estate have started on a steady positive note. Interestingly, domestic investors are increasingly gaining more ground in Indian real estate. It is evident in the whopping 45% share in Q1 2024 investments, a marked surge from prior years. Within domestic institutional investments, office and residential assets formed about 66%, reflecting a strategic approach to align with India’s growth trends. This also underscores growing confidence of diversified spectrum of investors across multiple investment strategies including credit and acquisitions,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

At USD 0.6 billion, office sector accounted for 57% of the total investment inflows during Q1 2024. Foreign investments remained predominant, driving over two-thirds of the sector’s inflows, reinforcing the confidence of global funds in the fundamentals of commercial office real estate in India. Institutional investors continued their preference for completed and pre-leased income-yielding office assets as compared to greenfield developments. With a collective 81% share, Bengaluru and Hyderabad were the leading markets for office investments, mirroring the robust office demand seen in these cities this quarter. Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity. Overall office demand across the top six cities also remained robust, at 13.6 million sq ft, marking a remarkable 35% increase compared to the same period last year.

Following a remarkable surge in investments in industrial and warehousing assets in 2023, the segment maintained its momentum, capturing an 18% share of total inflows in Q1 2024. A steady investment inflow of USD 0.2 billion during the quarter, similar to the same period previous year, indicated sustained growth in the particular segment. As the segment evolves, and micro-fulfillment centers, dark stores and AI-driven supply chain becomes more prevalent, consolidation and instutionalization will pick up pace, further driving global capital in the coming years.

Investment inflows (USD million) –

Asset Class Q1 2023 Q4 2023 Q1 2024 Q1 2024 vs Q1 2023 (% YoY Change) Q1 2024 vs Q4 2023 (% QoQ change)
Office 907.6 135.5 563.0 -38% 315%
Residential 361.1 81.0 102.6 -72% 27%
Alternate assets* 158.2 418.7 21.0 -87% -95%
Industrial & Warehousing 216.3 187.1 177.7 -18% -5%
Mixed use 15.1 130.8 766%
Retail
Total 1,658.3 822.3 995.1 -40% 21%

“With IMF’s projected GDP growth rate of 5.7% in 2024, India continues to garner significant investor interest within the APAC region. In Q1 2024, the APAC region contributed to over 82% of foreign inflows in India’s real estate sector, with investments predominantly focused on office assets followed by industrial & warehousing segment. The surge in investments by APAC countries such as Singapore can be attributed to a combination of factors including favorable investment climate, strong demand fundamentals across core & non-core segments within real estate, and strategic alliances in the form joint venture platforms. Amid evolving global capital trends, India’s real estate market promises significant growth potential and will continue to attract global capital from diverse regions,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Hyderabad and Pune attract over half of the inflows during the quarter

In Q1 2024, Hyderabad and Pune collectively attracted over 50% of the investment inflows in India, notably drawing substantial capital into office spaces and industrial & warehousing assets. These cities, alongside Bengaluru, solidified their positions as prime destinations for office sector investments. At the same time, investments in Industrial and warehousing assets were concentrated in Pune, Chennai, and Delhi-NCR, indicating robust industrial activity in these cities.

City-wise investment inflows in Q1 2024

City Q1 2024 Q1 2023 Investment share in Q1 2024 (%) YoY change (%)
Hyderabad 257.9 26%
Pune 254 26%
Bengaluru 203.2 196.6 20% 3%
Chennai 121 12%
Mumbai 30.7 40.8 3% -25%
Delhi NCR 29.2 380.9 3% -92%
Others/ Multi City 99.1 1,040.00 10% -90%
Total 995.1 1,658.30 100% -40%

Top 5 deals in Q1 2024

Investor Investee Deal Value (in USD million) City Asset class
GIC Waverock 257.9 Hyderabad Office
Edelweiss Capital MFAR Developers 178.0 Bengaluru Office
Ivanhoe Cambridge +LOGOS 132.3 Pune Industrial & warehousing
CLINT 93.3 Pune Office
Cholamandalam Investment and Finance Company Limited DLF 88.8 Chennai Mixed use

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