The Indian real estate sector accounted for investments amounting to USD 1.1 billion in Q1 2024, with the residential sector outshining other asset classes and acquiring investments close to 693 million, according to a report by Cushman & Wakefield.
The residential sector has been on an upward trajectory on the back of robust housing demand and resurgent supply in the past few quarters. It has also attracted numerous investors in Q1 2024, who are banking on the bull run of the segment, which contributed over 63% of the total quantum of realty investments in the quarter.
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In absolute terms, the Q1 2024 investment inflow into the residential market is double the quarterly average seen in the past 8 quarters.
Additionally, almost 48% of investment in the residential sector was focused on the early stages of development across top-8 cities, showcasing greater investor appetite, a steady rise in residential capital values across cities and rising share in high-end luxury launches.
Who is investing most?
The report reveals that domestic investors continued their robust investment momentum, with a total contribution of 57% of total quarterly investments. Foreign investors and collaborative (or mixed) deals comprised the remaining 43% of the inflow in Q1 2024. This is in line with the trend witnessed in 2023 with domestic investors’ participation in Indian realty increasing at a constant rate.
Where is the investment going?
Regarding the city-wise split, Bangalore led the charge by commanding 25.6% of total investments in Q1 2024, with the majority of the share going into the office sector in the city. Pune secured the second position in investment volume, claiming a 14% share.
Equity investments
Equity investments into the real estate sector in Q1 2024 stood at 58%, while debt investments surged to double the quarterly average level of the last eight quarters, and almost all of that was directed towards the residential sector.
Office sector continued to be the preferred sector among equity investors, accounting for 43%, closely trailed by residential investments at 38%. Early-stage deals, despite showing a slowdown from last quarter, continued to remain in line with the average in-flows over the past 8 quarters.
Additionally, the quarter recorded corporate transaction volumes of INR 12.78 bn (USD 0.15 mn), a 65% jump on a y-o-y basis. Mumbai continued to drive transaction value with 57% share in total, followed by Pune at 33% share.
Somy Thomas, MD, valuation & advisory and capital markets, Cushman & Wakefield, said, “Q1 2024 witnessed another strong quarter of capital inflow into the Indian Real Estate sector, with the residential sector dominating on the back of renewed customer and investor confidence. This strong performance has attracted investor attention, leading them to put money into a market projected for further growth.”
“Domestic investors’ uptick in investment numbers also continued in the quarter, which will provide further protection from any potential global headwinds and strengthen India’s domestic market and investor interests. As we enter the new financial year, we expect this momentum to continue, with potentially more diversified investments in the future.”
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