Realty PE investments touch record $1.7 bn, here are top deals of H1 2024

The quarterly data indicates that commercial office assets maintained their leading position, capturing approximately 51% of the total investment volume

The Indian real estate market is experiencing a surge in investor confidence, with private equity (PE) investments reaching a record $1.7 billion (Rs 142 billion) in the first half of 2024 (H1 2024). This marks a significant 42% increase compared to the same period in 2023, according to a report by Savills India, a global real estate consulting firm. 

However, the inflows in Q2 2024 were at par with the corresponding period previous year and stood at $1.1 billion (Rs 96 billion) in Q2 2024, according to the latest findings by Savills India.

Office Assets Remain King, But Residential Makes a Move

Traditionally, commercial office spaces have been the darling of PE investors in India. This trend continues, with office assets capturing roughly 51% of the total investment volume in H1 2024. This can be attributed to the strong leasing activity in high-quality office buildings, indicating a healthy demand from companies.

However, a major shift is brewing. Residential properties are catching the attention of investors at an unprecedented rate. With a 47% share of H1 2024 investments, residential real estate is now a close second to offices. This surge in interest is likely fueled by a combination of factors:

Sustained Demand: The demand for homes in India remains robust, driven by a growing population and urbanization.

New Project Funding: Developers are launching new residential projects, and institutional investors are providing the necessary funding, making these projects attractive investment opportunities.

Asian Investors Lead the Charge

Overall, 78% of the quarterly investment was contributed by Asian investors. A significant majority of this was concentrated in office and residential assets in Bengaluru and Hyderabad.

“In H1 2024, PE investment activity into the Indian real estate continued its momentum aided by India’s strong macro-economic scenario. While the commercial office sector maintained the lead due to robust leasing in investible grade assets, the residential sector also saw a notable uptick fueled by sustained demand, thereby reflecting investors’ confidence. Investors from the APAC region have demonstrated a growing interest in the Indian real estate, contributing over 70% of investments in H1 2024.” said Arvind Nandan, Managing Director, Research & Consulting, Savills India.

The report by Savills India also highlights some key investment transactions that took place during the period:

• A $263 million partnership investment by GIC and Xander Investment Management in a venture with the Shapoorji Pallonji Group.
• A $240 million investment by Abu Dhabi Investment Authority (ADIA) and Kotak AIF in Prestige Estates, a leading residential developer.
• A $228 million investment by Mapletree Investments in Adarsh Developers, another prominent player in the residential sector.

 While office spaces continue to be a major draw for investors, the residential sector’s rapid rise signifies a diversified and potentially more resilient market.