Investments in Indian real estate rise to record $4.8 bn in H1 2024: Report

Investment volumes in the first six months reach 81% of made in 2023, says JLL

Institutional investments in Indian real estate surged to $4.8 billion across 40 deals in the first half of 2024 (H1 2024) when the world was battling economic challenges, according to a report by JLL.

Investment volumes in the first six months of 2024 have already reached 81 per cent of the total made in 2023, which was at $5.8 billion. While investment volumes experienced a minor decline in Q1 2024 (Jan-March), robust investment activity was witnessed in the following quarter. H1 2024 witnessed twice the number of deals compared to the same period last year, with an average deal size of $113 million.

In H1 2024, foreign institutional investors (FIIs) held a dominant 65 per cent share of Indian investments, totalling $3.1 billion. In 2023, domestic investors accounted for 37 per cent of investments, compared to an average of 19 per cent over the previous five years. This trend appears to continue in H1 2024, with domestic investors representing a 35 per cent share.

“The residential sector in the Indian real estate market has experienced a significant revival, indicating a change in investor preferences towards this asset class. With 25 deals worth $1.6 billion, residential investments surpassed the office sector by 25 per cent in terms of transaction volume. Interestingly, domestic investors showed a greater inclination towards residential properties, while foreign investors continued to favour the office and warehousing sector,” said Samantak Das, chief economist and head of research and REIS, India, JLL.

Source: JLL

The office sector, which institutional investors have historically favoured, saw a decline in investments in H1 2024 compared to the previous year. The warehousing sector led at 34 per cent share of investments followed closely by residential at 33 per cent share.

However, it's important to note that the warehousing sector's investment surge was primarily driven by a single deal which accounted for over 92 per cent of the total transaction volume in the warehousing sector in H1 2024.

The residential sector achieved an all-time high half-year investment of $1.6 billion and this can be attributed to the regulatory reforms and improved transparency in the segment in the last 5-7 years. Investment towards this sector primarily weighed towards debt with 68 per cent of the deals being structured debt.

The JLL report predicted increased investment in emerging sectors like data centres, life sciences, student housing, and health care. This diversification will create new opportunities for investors and further strengthen India's real estate market.

“The private equity investment trend in the real estate sector has been highly encouraging, with H1 2024 witnessing the highest investments since H1 2006. While uncertainties and monetary tightening in developed countries present risks, we believe in the long-term strength of the Indian real estate market,” said Lata Pillai, Senior Managing Director, Capital Markets, India, JLL.