Residential and Warehousing Drive India’s Real Estate Investment Boom
In 2024, private equity (PE) investments in Indian real estate experienced a remarkable surge, reaching USD 4.2 billion—a 32% increase from the previous year. This sharp rise signals a significant shift in the preferences of global and domestic investors, who are increasingly drawn to India’s growing real estate market. Notably, the warehousing and residential sectors have been the key beneficiaries of this upswing. According to Knight Frank India’s recent report, the warehousing sector emerged as the dominant force, accounting for a substantial 45% of the total PE investments. Meanwhile, the residential and office sectors followed closely, contributing 28% and 26%, respectively.
The residential sector has seen the most notable shift, with investments doubling in 2024, reflecting a surge of 104%. The influx of USD 1.2 billion into this sector is attributed to rising end-user demand and a recovering housing market. The sector’s growth is also driven by an evolving investor focus, shifting towards under-construction properties. This trend highlights a diversification of investor strategies, with a shift from completed projects to the potential of ongoing developments. As India’s urban population continues to grow, the demand for quality housing is expected to remain strong, making residential properties an attractive investment class for private equity firms.
The warehousing sector, however, remains the star performer in India’s real estate landscape. With an astounding 136% increase in investments, from USD 684 million in 2023 to USD 1.9 billion in 2024, warehousing investments have been propelled by the booming e-commerce industry. This growth underscores the increasing need for efficient logistics and supply chain infrastructure, particularly in cities like Mumbai and Chennai, where demand for modern warehousing solutions is at an all-time high. The government’s focus on enhancing infrastructure and simplifying regulatory frameworks has also played a pivotal role in attracting both domestic and international investors to the warehousing space.
Mumbai has cemented its position as the prime destination for private equity investments, securing 50% of the total inflows into the Indian real estate market. Of the USD 2 billion invested in the city in 2024, the warehousing sector alone accounted for USD 1.5 billion. Bengaluru, with its strong economic fundamentals and status as a key business hub, followed as the second-largest recipient of PE investments, attracting USD 833 million. Despite the challenges faced by the office sector, which saw a 38% decline in investment compared to 2023, cities like Bengaluru and Hyderabad remain attractive due to their growing economies and expanding business environments.
In terms of foreign investment, the UAE emerged as the largest contributor, injecting USD 1.7 billion into Indian real estate—making up 42% of the total investment pool. Indian investors themselves followed closely, contributing USD 1.3 billion, while Singapore-based institutions contributed approximately USD 634 million. This diverse international interest speaks to the global confidence in India’s real estate market, with investors seeing long-term growth potential in the country’s rapidly expanding urban landscape.
While these developments signal a positive outlook for India’s real estate sector, sustainability remains a critical consideration for future growth. The explosive growth in warehousing and residential developments must be met with sustainable construction practices to mitigate environmental impact. Developers are increasingly adopting green building certifications, energy-efficient technologies, and waste management solutions as part of their projects. Additionally, urban planning must integrate smart infrastructure, including public transport and green spaces, to ensure sustainable growth in major cities. As the demand for real estate grows, it is imperative that future developments are designed with both economic and environmental sustainability in mind, creating spaces that not only cater to today’s demands but also preserve resources for future generations.
