Foreign investors invested $3.5 billion in Indian real estate market in first half of 2024

Mumbai: India’s real estate sector attracted $3.5 billion from foreign institutional investors in the first half of 2024, making it the third-most popular location in the world for land and development investments, according to a report by investment management firm Colliers.

Foreign investment accounted for 73% of the total investment in the Indian real estate market, with cross-border investment reaching over $1.5 billion. The APAC region contributed over $1.2 billion in inflows, according to the Global Capital Flows Report.

In the first quarter of the calendar year, the real estate market recorded USD 995.1 million of foreign investment, while in the second quarter this amount amounted to USD 2.5 billion.

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Almost 70% of the investment in the first half of the year was concentrated in mature assets. India’s rapid economic growth and infrastructure development are also likely to offer more opportunities in the development asset space in the coming years, the report said.

The industrial and warehousing sectors were the most active during this period. Investment in industrial assets increased almost fivefold compared to the same period last year.

“The investor interest is driven by the growth in demand from third-party logistics and e-commerce players and strengthening manufacturing capabilities in key industrial corridors of the country,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.

Mint had earlier reported that several new funds such as Mubadla, Mitsubishi Fudson, PAG Credit & Markets, Cadillac Fairview, Korea Investment Corp and PNB Malaysia are actively exploring the Indian real estate market. The funds are either expanding their investments or entering into new partnerships.

The Indian luxury market is another segment that is booming, with a CAGR of over 5% expected between 2023 and 2028. Non-resident Indians or NRIs are increasingly investing in Indian luxury real estate, injecting $13.1 billion into the market in the previous year. NRIs are expected to account for 20% of the total real estate investment in the country by 2025, Mint informed earlier.

In APAC, transaction volumes declined throughout 2024. While Q1 was actively in line with the previous year, Q2 saw volumes decline by 29% compared to 2023 levels. This is primarily due to a 30% decline in land and development site transactions in APAC, with sales in China down 40% year-on-year.