Equity investments in the Indian real estate sector are poised to exceed $10 billion in 2024, driven by strong inflows into office space assets and a growing pipeline for residential land acquisitions, according to a report by the Confederation of Indian Industry (CII) and real estate consultant CBRE.
The report, titled Leading the Charge: Crafting the Skylines of Tomorrow, was released at the CII Realty 2024 conclave. The event was inaugurated by D. Thara, additional secretary of the Ministry of Housing and Urban Affairs, alongside Anil Saraf, chairman of CII Northern Region’s real estate committee, and Ashwinder Singh, co-chairman of the same committee, as published by Hindustan Times..
The report indicates that equity investments are expected to hit a new record, surpassing $10 billion for the first time. Between January and September 2024, equity capital inflows reached $8.9 billion, marking a 46% year-on-year growth. During this period, nearly 200 deals were concluded, a significant rise from 151 deals in the same period in 2023. The average deal size also grew to nearly $45 million from about $36 million in 2023.
Key markets like Delhi-NCR, Mumbai, and Bengaluru remained the preferred destinations for real estate investments, collectively accounting for over 63% of the total capital inflows between January and September 2024. Delhi-NCR alone received the largest share, with approximately 26%, or $2.3 billion, of the total inflows.
Tier-II and III cities also saw a surge in investments, with nearly $0.6 billion flowing into these markets. Ludhiana, Mohali, Tuticorin, Hubli, Coimbatore, and Indore contributed to almost 76% of the total inflows into smaller cities.
Domestic investors, primarily developers, led the equity investments with nearly $6 billion, accounting for about 65% of total inflows. Foreign investors contributed approximately $3.1 billion, with North American and Singaporean investors representing around 85% of foreign capital.
Mid-sized deals ranging from $10 million to $50 million represented 56% of the total investment inflows. Institutional investors and collective vehicles were significant contributors, accounting for nearly 40% of the total equity capital deployed, while developer companies led the inflows with a share of more than 41%.
The office sector saw a resurgence, with equity inflows growing nearly 50% year-on-year in the first nine months of 2024. Office and land/development sites combined attracted more than 70% of total equity inflows during this period.
The residential, retail, and mixed-use sectors also experienced a rebound, capturing a healthy share of the overall equity inflows. Nearly 64% of capital inflows into land and development sites were directed toward residential developments, while the remaining portion was allocated to mixed-use projects, warehousing, retail, data centers, and hospital developments.
Debt financing in the Indian real estate sector soared to a new peak, surpassing $4.7 billion between January and September 2024—more than double the amount from the same period in 2023. A significant portion, around 60%, of the debt financing was directed toward key markets like Delhi-NCR, Mumbai, and Bengaluru. Additionally, over 30% of debt financing deals involved multiple cities, underscoring the sector’s adaptability.
Anshuman Magazine, chairman and CEO of CBRE India, South-East Asia, Middle East & Africa, projected that equity investments in 2024 would fall between $10 billion and $11 billion, the highest-ever level. He attributed this growth to sustained investor interest in the expanding Indian real estate market, driven in part by regulatory initiatives like SEBI’s SM-REIT framework, which is expected to open up investment opportunities in smaller but high-quality assets in Tier-II cities.
“Regulatory support will bring more transparency, creating new avenues for capital deployment and encouraging institutional participation in emerging markets,” Magazine said.
Anil Saraf, chairman of the CII Northern Region Committee on Real Estate and CMD of ASF Group, highlighted the critical role of the real estate sector in India’s economy, noting its substantial contribution to GDP and employment. Beyond housing and construction, the sector is also fueling growth in ancillary industries.