Indian Realty Attracts $6.5 Billion in 2024: Highest Institutional Inflows in Five Years

Institutional investments in Indian real estate reached a five-year high of $6.5 billion in 2024, marking a 22% increase from the $5.4 billion recorded in 2023, according to a report by real estate consultancy firm Colliers.

This surge underscores a robust recovery in the sector, with both domestic and international investors displaying heightened confidence in India’s real estate market.

Quarterly Performance and Domestic Investment Growth

The fourth quarter of 2024 was particularly noteworthy, with inflows totaling $1.9 billion—2.3 times more than the same period in 2023. Domestic investments played a significant role during this quarter, accounting for 43% of the inflows. This trend highlights the growing confidence of India-based institutional investors alongside sustained interest from international counterparts.

Sector-Wise Investment Distribution

A detailed analysis of the investment distribution across various real estate segments reveals shifting dynamics:

• Industrial & Warehousing: This segment attracted $2.5 billion, constituting 39% of total inflows and representing a 190% year-on-year increase. The substantial growth reflects a rising demand for quality Grade A developments and enhanced logistics efficiency. Large-scale deals significantly contributed to investments in this category, indicating a move towards consolidating industrial and warehousing assets.
• Office: Investments in office spaces amounted to $2.3 billion, accounting for 36% of the total inflows. However, this represents a 23% decline compared to 2023, suggesting a potential shift in investor preference or market dynamics within the office segment.
• Residential: The residential segment saw investments of $1.1 billion, making up 17% of the total and marking a 46% increase from 2023 levels. This growth indicates renewed interest and confidence in the residential real estate market.
• Alternate Assets: Investments in alternate assets, including data centers, life sciences, senior housing, holiday homes, student housing, and schools, totaled $39.5 million, reflecting a 94% year-on-year decline. This significant drop suggests a reduced focus on these asset classes during the year.

Foreign vs. Domestic Investment

Foreign investments continued to dominate, contributing $4.3 billion and accounting for 66% of the total inflows. Notably, investors from the Asia-Pacific (APAC) region were responsible for almost one-third of these foreign investments, indicating strong regional interest in India’s real estate market. Domestic investments also experienced a steady rise, surging 27% year-on-year, reflecting increased participation from local investors.

City-Wise Investment Distribution

Mumbai emerged as the top destination for real estate investments, attracting 24% of the total inflows in 2024. The city’s strong infrastructure, economic opportunities, and status as a financial hub continue to make it a preferred choice for investors.

Outlook for 2025

Looking ahead, Tier-I cities are expected to continue attracting the majority of capital, bolstered by government initiatives such as infrastructure development and the ‘Make in India’ campaign. While global investor confidence is likely to remain strong, 2025 is anticipated to witness increased capital deployment from domestic players across office, residential, and industrial assets.

Badal Yagnik, Chief Executive Officer of Colliers India, stated, “With a record $6.5 billion inflows in 2024, Indian realty investments have been the highest since 2020. Interestingly, APAC investors drove almost one-third of the foreign inflows in the country’s real estate during the year. Looking ahead, Tier-I cities will continue to attract majority of the capital, amidst government impetus on infrastructure development and ‘Make in India’ initiative. While global investors’ confidence is likely to remain upbeat, 2025 is likely to see increased capital deployment from domestic players across office, residential, and industrial assets.”

In conclusion, the significant increase in institutional investments in Indian real estate during 2024 reflects a robust recovery and growing confidence in the sector. The diverse distribution of investments across various segments and the active participation of both foreign and domestic investors indicate a dynamic and evolving market poised for continued growth in the coming years.