The year 2024 saw the real estate sector attracting institutional investments of $8.8 billion across deals. Among different asset classes, the residential segment attracted almost half of the inflows followed by office buildings at 28% and warehousing properties at 23% among others, a report by JLL has said.
JLL India has estimated the institutional investment in Indian real estate at $8.878 billion in 2024 compared to $5.878 billion in the preceding calendar year.
This figure stands as the highest on record, eclipsing the 2007 peak of $8.4 billion and represents a substantial 51% increase from the previous yearโs $5.8 billion.
Also, deal activity intensified, and the year saw an increase in number of deals by 47%.
This robust performance underscores the growing confidence in Indian real estate, positioning 2024 as a pivotal year for the industry, the consultant said. Additionally, 2024 saw a total of $2.4 billion in platform commitments. These funds are earmarked for gradual investment over the coming 3-5 years.
Residential real estate dominates: Sector claims 45% of total investments.
2024 witnessed the residential sector with the highest amount of investments at 45% share of the total investments, followed by office at 28%. While the office sector dominated institutional investments post-2015, 2024 has witnessed a paradigm shift.
โThe residential sector has emerged as a standout performer, attracting more than $4 billion across 49 deals, marking a 4-fold increase from the previous year and outpacing the office sector by 63% in transaction volume. Notably, domestic investors gravitated towards residential properties, while foreign investors maintained their preference for office and warehousing assets,” said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL
Also, QIPs have emerged as a dominant funding route, accounting for 57% of the total investment volume in this sector. This shift in investment patterns highlights the evolving dynamics of India’s real estate landscape and its ability to attract diverse capital despite global economic headwinds, he said.
Office investments have experienced a downturn in 2024, with a 17 % decrease compared to 2023. Despite this decline, the sector still attracted $2.5 billion in investments across 18 deals, with a significant 61% of these transactions focusing on core assets.
The residential investment landscape underwent a notable shift in 2024. In 2023, investors predominantly favoured structured debt, which comprised 92% of residential investment volumes, reflecting a cautious stance in an uncertain market.
However, in 2024 equity contributions surged, accounting for 54% of total sector investments. This substantial increase in equity participation indicates a growing investor confidence in the residential sectorโs potential for capital appreciation and higher returns. Notably, more than half of the total investment in this sector, approximately $2.3 billion, was raised through QIPs, JLL said in its report.
$8.9 billion investments in 2024 compared to $5.8 billion in 2023
Foreign institutional investors continue to dominate the investment landscape, accounting for 63% share of total investments in the sector. Government efforts to enhance transparency and accountability in real estate have given a boost to investor confidence in the last few years, the report said.
Since CY 2023 the market witnessed a significant increase in institutional investments from domestic domiciled investors and this continued in CY 2024 with domestic investors accounting for 37% share of the total investments.
Lata Pillai, Senior Managing Director & Head of Capital Markets, India, JLL, said, โStrong growth, political stability, and diverse investment opportunities positioned India favourably in the global economic context.โ
She highlighted that a notable shift is the increasing participation of domestic domiciled investors since 2023 and this trend appears to continue in 2024 with them contributing 37% share compared to an average of 19% between 2019-2022.
Pillai said the REITs in India have seen a substantial surge in activity recently. Their investments in 2024 reached nearly $800 million, marking a more than three-fold increase from 2023 levels.
“Looking ahead, QIPs are expected to play a significant role in capital raise as the market is likely to see an increase in newly listed players,” she added.
