Huge Surge in Investments Propels India’s Real Estate Market to New Heights
India’s real estate market has witnessed a remarkable surge in investments during the second quarter of 2024, reaching a staggering $2.77 billion. This outstanding influx has propelled total investments for the first half of the year to a record-breaking $3.9 billion, according to Cushman & Wakefield’s latest Capital Market Beat report. Here are the key highlights from the report:
Delhi-NCR Emerges as Top Destination
Delhi-NCR has emerged as the top destination for private equity investments in Q2, capturing 19% of the total share of investments and attracting an impressive $532 million. This signifies a significant 74% year-on-year increase for the city. Delhi also maintained its lead during the first half of the year, securing approximately $633 million in inflows, accounting for a 16% share of the sector’s record-breaking $3.9 billion investment. The surge in investments in Delhi can be attributed to the strength of both the office and residential segments, particularly in the high-end and luxury categories.
Other Key Cities Attract Investors
Following Delhi-NCR, Bengaluru ranks second with a 13% investment share totaling $509 million, while Hyderabad captures 8% with $320 million in investments during H1. Additionally, multi-city deals accounted for 48% of the total investments, amounting to $1,862 million. This trend highlights a diversified investment strategy spread across different regions.
Logistics & Industrial Sector Dominates
The surge in investments during this quarter was primarily dominated by the Logistics & Industrial (L&I) sector, attracting a substantial 56% of the total investments, equivalent to $1,542 million. Furthermore, the L&I sector maintained its leading position, capturing 41% of the total H1 inflows. The office sector closely followed, attracting $924 million in Q2, and a total of $1,196 million during H1. The residential sector came third with $309 million of investments in Q2 and $1,002 million during H1.
Foreign Investors Drive Growth
Foreign investors have played a crucial role in India’s real estate market, contributing 76.3% of the total investment volume in Q2 2024. A considerable proportion of these investments were directed towards the Logistics & Industrial sector. Deals involving a combination of equity and structured debt accounted for 62% of the total inflows, while pure equity infusion deals represented 25%.
Manufacturing and Tertiary Sectors Show Promising Growth
In terms of macroeconomic indicators, the manufacturing sector has exhibited a year-on-year growth of 9.9%, while the tertiary sector experienced an impressive annual growth rate of 7.6%. Additionally, GST collections for June 2024 rose by 8% year-on-year, indicating robust domestic transaction volumes.
Positive Outlook for India’s Real Estate Market
With private equity inflows already surpassing 70% of last year’s total in the first half of 2024, India’s real estate market is primed for a buoyant year. The surge in investments can be attributed to infrastructure-related sectors such as logistics and industrial, driven by significant public investments in multi-modal economic corridors. The strong demand for office and residential spaces further solidifies the market’s appeal. Somy Thomas, Managing Director of Valuation & Advisory and Capital Markets at Cushman & Wakefield, stated that “with continued positive momentum, we anticipate a buoyant year for private equity investments in the commercial real estate sector, potentially exceeding initial expectations.”
In conclusion, India’s real estate market has experienced a transformative surge in investments during Q2 2024, significantly surpassing previous records. The dominance of Delhi-NCR, the rise of the Logistics & Industrial sector, and the involvement of foreign investors reflect the vibrancy and confidence in India’s real estate market. With optimistic macroeconomic indicators and strong demand across various segments, the future looks promising for India’s commercial real estate sector.
