India’s real estate market experienced a significant surge in investments during the second quarter of 2024. The market attracted USD 2.77 billion in investments, marking a notable milestone as reported by Cushman & Wakefield. This influx of capital pushed the total investments for the first half of the year to a record-breaking USD 3.9 billion. This represents a 1.5x increase compared to the previous quarter and a substantial 39% growth year-on-year, underscoring the sustained investor confidence in India’s real estate market.

Key Drivers of Investment Growth

Infrastructure-Related Sectors Lead the Way

A primary driver of this surge has been the infrastructure-related sectors, particularly logistics and industrial. These sectors have benefited from significant public investments in multi-modal economic corridors, creating robust opportunities for private equity inflows. In the first half of 2024, USD 3.9 billion of private equity inflows were recorded, surpassing 70% of the total inflows from the previous year.

Investment Distribution by Sector in H1 2024:

• Logistics & Industrial (L&I): USD 1,542 million
• Office: USD 1,196 million
• Residential: USD 1,002 million

Foreign Investment and Equity Infusion

Foreign investors played a crucial role, contributing 76.3% of the total investment volume in Q2 2024. The Logistics & Industrial sector received a significant portion of these investments. Moreover, deals involving a combination of equity and structured debt constituted 62% of the total inflows, while pure equity infusion deals made up 25%.

City-Wise Investment Analysis

Delhi-NCR: The Top Investment Destination

Delhi-NCR emerged as the leading destination for private equity investments in Q2 2024, attracting USD 532 million and capturing 19% of the total share. This marks a significant 74% year-on-year increase. The city continued its dominance in H1 2024, securing USD 633 million of inflows, which is 16% of the record USD 3.9 billion investment in the sector. The investment surge in Delhi has been primarily driven by the office segment, with major equity buyouts by prominent fund houses. The high-end and luxury residential segments also saw sustained interest.

Other Key Cities

• Bengaluru: USD 509 million (13% share)
• Hyderabad: USD 320 million (8% share)

Multi-city deals accounted for the remaining 48% of investments, reflecting a diversified investment strategy across various regions.

Economic Indicators Supporting Growth

Manufacturing and Tertiary Sectors

India’s macroeconomic environment has shown positive growth, further bolstering the real estate market. The manufacturing sector grew by 9.9% year-on-year, while the tertiary sector saw a 7.6% annual increase.

GST Collections

GST collections for June 2024 rose by 8% year-on-year, indicating robust domestic transaction volumes. This is a positive sign of the overall health and growth potential of the Indian economy.

Future Outlook

The strong demand for office and residential spaces continues to drive the market’s appeal. With continued positive momentum, it is anticipated that private equity investments in the commercial real estate sector will remain buoyant throughout the year, potentially exceeding initial expectations.

The Q2 2024 surge in investments in India’s real estate market reflects a robust and growing investor confidence. With significant contributions from foreign investors and a strategic focus on logistics, industrial, and office sectors, the market is set for continued growth. The strong economic indicators and the diversification of investment across multiple cities and sectors further underscore the positive outlook for India’s real estate market in the near future.