According to a Cushman & Wakefield report, the Indian real estate sector received USD 1.1 billion in investments in Q1 2024, with the residential real estate sector outperforming other asset classes and attracting investments of nearly $693 million.
In recent quarters, the residential sector has been on an upward trend, driven by strong housing demand and resurgent supply. It has also attracted a great deal of capital from investors in Q1 2024, who are banking on the segment’s bull run, which accounted for more than 63% of total realty investments in the quarter.
In absolute terms, the Q1 2024 investment inflow into the residential market is twice the quarterly average over the previous eight quarters.
Furthermore, nearly 48% of investment in the residential sector was concentrated in the early stages of development across the top eight cities, indicating increased investor interest, a steady rise in residential capital values across cities, and a growing share of high-end luxury launches.
Who is investing the most?
According to the report, domestic investors maintained a strong investment momentum, accounting for 57% of total quarterly investments. Foreign investors and collaborative (or mixed) deals accounted for 43% of the inflows in Q1 2024. This is consistent with the trend observed in 2023 when domestic investors participated in Indian real estate.
In terms of city-specific split, Bangalore led the way, accounting for 25.6% of total investments in Q1 2024, with more than half of the share going to the city’s office sector. Pune ranked second in terms of investment volume, accounting for 14%.
Investment in equity
Equity investments in the real estate sector stood at 58% in Q1 2024, while debt investments increased to double the quarterly average level of the previous eight quarters, with almost all of that going to the residential sector.
The office sector remained the preferred sector among equity investors, accounting for 43%, closely followed by residential investments (38%). Despite a slowdown from the previous quarter, early-stage deals remained consistent with the average in-flows over the last eight quarters.
In addition, corporate transaction volumes increased by 65% year on year, reaching INR 12.78 billion (USD 0.15 million). Mumbai continued to drive transaction value, accounting for 57% of the total, followed by Pune at 33%.
According to Somy Thomas, MD of valuation & advisory and capital markets at Cushman & Wakefield, “Q1 2024 saw another strong quarter of capital inflow into the Indian real estate sector, with residential dominating due to renewed customer and investor confidence. This strong performance has piqued investors’ interest, prompting them to invest in a market that is expected to grow even more.
“Domestic investors increased their investment in the quarter, providing additional protection against potential global headwinds while strengthening India’s domestic market and investor interests. As we start the new fiscal year, we expect this momentum to continue, with potentially more diverse investments in the future.