Institutional investment in the real estate sector reached $1 billion in the first quarter of 2024. Although this was a 40% decrease compared to the same period last year, real estate investment showed continuous improvement, recording a 21% increase over the previous quarter, the report states. Colliers said.
Foreign investment continued to dominate, accounting for 55% of total inflows during the quarter. Domestic investment also showed a remarkable increase in the first quarter of 2024, increasing by 15% compared to the previous year. The share of domestic inflows in total institutional investment continued to rise to 45% in the first quarter of 2024, compared to 24% in the first quarter of 2023, the report said.
Apart from core asset classes such as office, the first quarter saw significant institutional investment in industrial, warehousing and residential sectors. Each segment had capital inflows of $200 million and $100 million, respectively, in the first quarter of 2024, accounting for 28% of the total total investment.
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“Institutional investment in Indian real estate is $1 billion and has started to do well steadily. What is interesting is that domestic investors are increasingly gaining ground in Indian real estate. This is evident from the 45% share of investment in the first quarter, a notable increase from the previous year. Of the domestic institutional investment, office and residential assets accounted for approximately 66%, which is the highest in India. It reflects a strategic approach that is aligned with the growth trends of India,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.
Hyderabad and Pune attract more than half of inflows in the quarter
In the first quarter of 2024, Hyderabad and Pune together attracted over 50% of investment inflows into India, with significant capital flocking to office space, industrial and warehousing assets in particular. These cities, along with Bengaluru, have consolidated their position as major investment destinations in the office sector.
At the same time, investments in industrial and warehousing assets are concentrated in Pune, Chennai and Delhi-NCR, indicating high industrial activity in these cities, the report said.
Investment inflows into office and industry continue to grow
The office sector accounted for 57% of total investment inflows in the first quarter of 2024 at $600 million. Foreign investment continues to dominate, accounting for more than two-thirds of inflows into the sector, reinforcing global funds’ confidence in the fundamentals of commercial office real estate. India.
Institutional investors continued to favor completed and pre-lease profitable office assets compared to greenfield developments.
Bangalore and Hyderabad are the leading markets for office investment with a combined share of 81%, reflecting the strong office demand seen in these cities this quarter. In the first quarter of 2024, Bangalore and Hyderabad emerged as top contenders for demand for Grade A office space, cumulatively accounting for more than half of India’s leasing activity.
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Office demand across the top six cities also remained strong, at 13.6 million square feet, a notable 35% increase compared to the same period last year.
Investment in industrial and warehouse assets
Following a significant surge in investments in industrial and warehousing assets in 2023, the sector maintained its momentum, capturing an 18% share of total inflows in the first quarter of 2024.
It said stable investment inflows of $200 million during the quarter, similar to the same period last year, indicate sustained growth in certain sectors.
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As the sector evolves and micro-fulfillment centres, dark stores and AI-driven supply chains become more prevalent, the pace of consolidation and organization will accelerate and further propel global capital in the coming years, according to Colliers. the report states.
