India’s real estate investment trajectory in 2024

The year 2024 was a landmark for India's real estate sector, with institutional investments hitting a record USD 8.9 billion across 78 deals, a 51% increase from 2023. This surge in investment volume was accompanied by a 47% increase in deal activity. Foreign institutional investors dominated, contributing 63% of total investments, while domestic investors accounted for 37%. The year also saw USD 2.4 billion in platform commitments earmarked for gradual investment over the next 3-5 years. Qualified Institutional Placements (QIPs) emerged as a significant funding source, raising USD 2.7 billion for the sector, underscoring strong investor confidence and the sector's post-pandemic rebound.

The investment landscape saw notable shifts in 2024. The residential sector attracted the highest amount of investments at 45% share, followed by the office sector at 28%. This marks a change from previous years when the office sector dominated. In the residential sector, equity contributions surged to 54% of total sector investments, up from predominantly structured debt in 2023. Non-core assets accounted for 77% of total real estate transaction volumes, up from 53% in 2023, reflecting increased risk appetite among investors. The Americas rebounded to contribute 26% of investments, followed by APAC at 20%. Equity route continued to dominate investments at 78% share of the total.

Looking ahead to 2025, the Indian real estate market is set for further growth and diversification. Emerging asset classes such as data centers, warehousing, student housing, life sciences, and healthcare are gaining traction. The largest platform commitment of 2024 was a USD 1.7 billion partnership in the digital infrastructure sector. Two additional InvITs in warehousing are anticipated in 2025, with a combined fundraising target of approximately USD 1 billion. A new REIT collaboration between a US-based fund house and local partners aims to raise an additional USD 1 billion, with the IPO slated for mid-2025. The warehousing sector saw significant growth, primarily fueled by a USD 1.5 billion investment from ADIA and KKR in Reliance Retail Ventures Limited's assets. Despite a 17% decrease in office investments compared to 2023, the sector still attracted USD 2.5 billion across 18 deals. Overall, the private equity investment outlook in Indian real estate remains strong, with continued growth expected in the coming years.

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