Indian real estate investments surged to a record $2.5 billion in the second quarter of 2024, the highest level seen in three years. Major metropolitan areas, particularly Bangalore and Delhi NCR, have emerged as prime hotspots for investment, with a distinct focus on the industrial and warehousing sectors. According to a recent report by Colliers India, a leading real estate consultancy, these segments have captured the lion’s share of capital inflows, marking a notable shift in market dynamics.
The industrial and warehousing segment emerged as the standout performer, accounting for an impressive 61% of the total investment, equating to approximately $1.5 billion. This growth trajectory is largely propelled by the rapid expansion of India’s burgeoning e-commerce sector and a heightened emphasis on domestic manufacturing. High-quality warehouses and logistics facilities are becoming critical to support this boom, making them particularly attractive to investors keen on capitalising on the sector’s potential. Investment momentum saw a significant uptick in Q2 2024, following a more subdued start in the first quarter. The residential real estate segment also posted remarkable growth, with investments increasing by 7.5 times compared to the same period last year. This rise underscores a growing investor confidence in residential properties as secure and profitable investments.
Conversely, the office real estate segment has faced challenges, with investments plummeting by 83% year-over-year. However, the quarter-over-quarter decline was a more moderate 41%, hinting at possible stabilisation and a gradual recovery in the coming months. Foreign investors, primarily from the United States and the UAE, accounted for a significant 81% of these investments. This influx of global capital reflects a burgeoning confidence in the Indian economy and its real estate sector. Colliers India’s report further noted that the residential segment attracted 21% of total institutional inflows, securing a robust presence despite the overall downturn in office investments. The industrial and warehousing segment witnessed an astounding 11-fold increase in investments compared to the previous year, driven by several large transactions indicative of strong demand. Both domestic and global investors are expected to play a pivotal role in consolidating industrial and warehousing properties across India, spurred by the rise of e-commerce and retail consumption, which will likely increase demand for AI-enabled warehouses and micro-fulfilment centres.
Notably, multi-city deals dominated the landscape, constituting 72% of total investment inflows during Q2 2024. Bangalore and Delhi NCR accounted for around 23% of total inflows, primarily driven by foreign investments. In Bangalore, 56% of quarterly inflows were channelled into residential assets, while Delhi NCR experienced a robust 86% year-over-year surge in investment, particularly within the office segment. This boom in real estate investments reflects the evolving landscape of the Indian property market, with industrial and warehousing assets leading the charge. As this sector continues to expand, it is poised to attract further investment, underscoring its essential role in India’s economic development.
