Institutional investments in India’s real estate sector have reached a three-year high, hitting $2.5 billion in the June quarter, driven by robust activity in the industrial, warehousing, and residential segments, according to a recent report by Colliers, a global real estate consulting firm.The industrial and warehousing segment has been the primary driver of this growth, accounting for a substantial 61% of the total investments, amounting to $1.5 billion. This segment saw an impressive eleven-fold increase from Q2 2023, largely propelled by a few significant deals. The sharp rise underscores the increasing attractiveness of industrial and warehousing spaces as investors seek opportunities in high-growth areas.
The residential segment also demonstrated strong growth, with investments surging 7.5 times from the previous year to reach $543.5 million, capturing a 21% share of total investments. This rise reflects a heightened demand for residential properties, prompting developers to acquire more land for residential development and thereby attracting significant capital. However, the office sector witnessed a contrasting trend, with institutional inflows plummeting by 83% in Q2 2024. Sequentially, investments in office spaces fell by 41%, highlighting a shift in investor focus. According to experts, this decline is attributed to the saturation of high-quality, income-generating office assets that are now predominantly held by strong investors, reducing the availability of such assets for new investments.
“The increase in demand for residential properties has driven developers to procure land for residential purposes, attracting more capital,” commented an expert in Realty Fund. “Conversely, investments in office spaces have decreased due to the saturation of high-quality income-generating assets being traded and held by strong investors. We will see more fund flows into the residential segment for land acquisition in the coming quarters.”The report by Colliers suggests that the industrial and warehousing segment will continue to attract significant investments due to its growing importance in the logistics and supply chain sectors. Meanwhile, the residential sector is expected to see sustained interest from institutional investors, driven by ongoing demand for housing and the strategic acquisition of land by developers.As the Indian real estate market continues to evolve, these trends indicate a dynamic shift in investment patterns, with a clear preference for sectors poised for long-term growth. This changing landscape is set to shape the future of real estate investments in the country, offering new opportunities for investors and developers alike.
