Institutional investments in the Indian real estate sector increased 41% year-on-year to $0.96 billion in the July-September period of 2024, according to a report released by property consultancy Vestian on October 21. However, it sharply declined from the record $3.1 billion in investments received in the previous quarter.
Despite this significant quarterly decline of 69%, the consultant said that the outlook remains positive.
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The uptick in investments compared to the previous year is a testament to Indiaโs robust economic growth amid prevailing geopolitical challenges, the report noted. As a result, the share of foreign investors increased from 27% in Q3 2023 to 46% in Q3 2024. Conversely, the share of domestic investors declined to 43% in Q3 2024 from 71% in the same quarter a year earlier. However, the decrease was only 15% in terms of value, the report said.
Shrinivas Rao, FRICS, CEO, Vestian said, โInvestors have shown confidence in Indiaโs growth story on the back of robust GDP growth. As a result, the real estate sector witnessed increased participation from foreign investors which led to institutional investments touching a billion mark in Q3 2024. Additionally, domestic investors are also actively participating, supported by the rapid infrastructure development across the country.โ
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Work-from-office mandates and GCCs add to commercial investments
According to the report, residential assets were the first preference for domestic investors during Q3 2024 whereas foreign investors accounted for 64% of the commercial deals. Meanwhile, growing prominence of work-from-office mandates and GCCs (global capability centres) lured foreign investors, leading to an increase in the share of commercial investments from 24% in Q3 2023 to 71% in Q3 2024.
Simultaneously, the share of the residential sector reduced to 19% in Q3 2024 from 44% in the same period a year earlier, per the report. However, investment in residential assets is expected to grow in the coming quarters as niche asset classes such as co-living, senior housing, and serviced apartments are gaining traction, the report noted.
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Furthermore, Chennai received the highest investments during Q3 2024 with a 48% share, the report said. It added that a majority of investments in the city were concentrated in industrial and warehousing, commercial, and residential sectors, the report showed.
Lastly, proptech platforms have also garnered traction with a 22% share of total investments recorded during Q3 2024. The share is likely to inflate further with the extensive use of artificial intelligence and machine learning in the real estate sector, the report said.
