In an impressive display of growth, Indian real estate investments reached a record $2.5 billion in the second quarter of 2024, the highest in three years. Major metropolitan areas such as Bangalore and Delhi NCR have become prime destinations for investment, particularly in the industrial and warehousing sectors.
According to Colliers India, a leading real estate consultancy, these sectors have drawn the majority of the capital, marking a significant trend in the market.The industrial and warehousing segment emerged as the star performer, attracting 61% of the total investment, which translates to approximately $1.5 billion. This surge is largely attributed to the rapid expansion of India’s e-commerce sector and an increasing focus on domestic manufacturing. High-quality warehouses and logistics facilities are becoming essential to support this growth, making them highly attractive to investors.
Investment momentum picked up sharply in Q2 2024 compared to a steady start in the first quarter. The residential real estate segment also witnessed substantial growth, with investments increasing by 7.5 times compared to the same period last year. This surge suggests a rising investor confidence in the residential market, viewing homes as a secure and profitable investment. Conversely, the office real estate segment experienced a notable decline. Investment in office spaces dropped by 83% year-over-year, reflecting a more cautious approach among investors.
However, the quarter-over-quarter decline was a modest 41%, indicating potential stabilization and the possibility of a gradual recovery in future quarters. A significant majority of these investments—81%—came from foreign investors, predominantly from the United States and the UAE. This influx of foreign capital underscores a growing global confidence in the Indian economy and its real estate sector. Colliers India’s report highlighted that the residential segment accounted for 21% of total institutional inflows into Indian real estate, capturing a substantial share despite the overall decline in office investments.
The total investment volume for the first half of 2024 reached $3.5 billion, compensating for the slower start observed in the first quarter. The industrial and warehousing segment saw an 11-fold increase in investments compared to the same period in the previous year. This surge was driven by several large deals, indicating a strong demand for these assets. Both global and domestic investors are expected to play a crucial role in consolidating industrial and warehousing properties across India. The rise of e-commerce and retail consumption is likely to boost demand for AI-enabled warehouses and micro-fulfilment centres in the coming quarters.
Multi-city deals continued to dominate, accounting for 72% of the total investment inflows during Q2 2024. Bangalore and Delhi NCR together represented about 23% of the total inflows for the quarter, driven largely by foreign investments. In Bangalore, 56% of the quarterly inflows were directed towards residential assets, followed by the office segment. Meanwhile, Delhi NCR saw a robust 86% year-over-year increase in investment inflows, particularly strong in the office segment. This surge in real estate investments highlights the evolving landscape of the Indian realty market, with industrial and warehousing assets at the forefront of this growth. As the market continues to expand, these sectors are poised to attract further investment, reinforcing their pivotal role in India’s economic development.
