India's real estate investment plummets 55% in Q1 2024, shows data

Institutional investment in real estate declined by 55% during Q1 2024 to $552 million. This decrease has been attributed to the cautious stance of foreign investors, influenced by global macroeconomic uncertainties, according to the consultancy firm Vestian.

Domestic investors, on the other hand, demonstrated resilience, capturing 98% of the total institutional investments for the quarter. This is a significant rise from 36% in the same quarter of the previous year. Despite the higher proportion of domestic capital, the actual value of investments rose by just 21%, with domestic parties investing approximately $541 million across multiple transactions.

Shrinivas Rao, FRICS, CEO of Vestian, said, "Domestic investors are bullish about India’s growth story, continue to pour in investments in the real estate sector. On the other hand, foreign investors are cautious due to global macroeconomic uncertainty and geopolitical tensions."

In terms of asset type, commercial real estate—which includes office spaces, retail outlets, co-working spaces, and hospitality projects—drew the most investment, with $232 million directed to these sectors. Residential real estate followed closely with $225 million in investments.

While the proportion of investments in commercial assets increased to 42% from 39% in the previous year, their monetary value actually fell by 52%. Residential investments also saw an increase in their share, up to 41% from 27% in the first quarter of 2023, yet their value decreased by 33% year-on-year. The industrial and warehousing sector experienced the most substantial decline, with investments plummeting by 73% compared to the previous year.

Bengaluru leads

Geographically, Bengaluru emerged as the leader in attracting institutional investments, with a total of $299 million, followed by the National Capital Region (NCR), which saw $110 million in investments. Together, these two regions accounted for about 74% of all investments in this quarter. Edelweiss Capital was notably the most active investor, deploying over $300 million across various asset classes and locations.

Rao further stated, "The Indian real estate sector is expected to garner increased investments in the coming months on the back of a strengthened economic scenario and robust demand."