India's Real Estate Segment Sees $3 Billion Private Equity Investment in H1 2024
Private equity firms invested $3 billion in the Indian real estate segment in H1 2024, recording a 15% increase from the same period last year.
Private EquityReal EstateIndiaKnight Frank IndiaInvestmentReal Estate NewsJul 18, 2024
The warehousing sector accounted for the largest share of 52% of total PE investments during the six-month period, followed by residential (29%) and office (20%). According to a report by Knight Frank India, PE investments in the residential sector saw a significant increase of over 209% to $854 million in H1 2024 from $277 million a year ago.
The office sector, which received the highest share of PE investments since 2018, was surpassed by the warehousing sector, which became the most popular, attracting more investment than the combined total of the office, retail, and residential sectors.
Mumbai dominated the PE investment landscape, with a significant increase in PE investment inflows rising from $1,242 million in H1 2023 to $1,701 million in H1 2024. The warehousing sector accounted for 88% of the total PE investments in Mumbai, while the residential sector contributed 12% amounting to $201 million.
Bengaluru received approximately 20% of the total PE investments, totalling $581 million in H1 2024. Around 69% of these investments, amounting to $403 million, were dedicated towards the residential sector. The remaining 31% or $178 million were invested in the office sector.
The investment in the warehousing segment showed a significant upward trajectory in H1 2024, reaching $1,532 million, a remarkable 176% increase from the $555 million recorded in H1 2023. Geographically, Mumbai and Chennai were the primary beneficiaries, attracting $1,500 million and $32.3 million respectively in the warehousing sector.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, noted that India has been favourably viewed for investments, especially in the last decade, due to economic stability and growth. However, recent economic conditions and higher inflation have led funds from western economies to adopt a wait-and-see stance.
However, Indian commercial real estate continues to thrive due to factors like return to work, rising office absorption, and strengthening rental values. Similarly, a year-on-year strengthening of residential market and continued consumer activities in retail further bolstered by economic growth has incentivised funds to adopt a long-term perspective towards investment in real estate.
Looking ahead, we expect some easing of conditions in the western world, which will bring back the investments from global players. This, combined with India's growth trends, is expected to lead to increased investment activity from global funds,
Frequently Asked Questions
What was the total private equity investment in the Indian real estate sector in H1 2024?
The total private equity investment in the Indian real estate sector in H1 2024 was $3 billion (around Rs 25,000 crore).
Which sector accounted for the largest share of total PE investments during the six-month period?
The warehousing sector accounted for the largest share of 52% of total PE investments during the six-month period.
What was the percentage increase in PE investments in the residential sector in H1 2024 from the previous year?
The PE investments in the residential sector saw a significant increase of over 209% to $854 million in H1 2024 from $277 million a year ago.
Which city dominated the PE investment landscape in H1 2024?
Mumbai dominated the PE investment landscape, with a significant increase in PE investment inflows rising from $1,242 million in H1 2023 to $1,701 million in H1 2024.
What is the expected trend in PE investments in the Indian real estate sector in the future?
Looking ahead, we expect some easing of conditions in the western world, which will bring back the investments from global players. This, combined with India's growth trends, is expected to lead to increased investment activity from global funds.
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