According to a latest report from Colliers, the institutional inflows to Indian real estate hit $1.1 billion in value in Q3 2024, notching up the highest year-over-year increase at 45%. The office segment was mainly in focus, representing 54% of all investments made. Second in line was the residential segment, making up 33% of the investments.
The trend was driven largely by domestic capital and amounted to residential investments worth $1.1 billion in September. This trend manifests a growing demand for domestic and foreign institutional investors who have developed an interest since home ownership trends have started to rise. Based on aggregate investments that exceeded $1 billion in the first nine months of 2024, these accounted for a remarkable 46% more than the inflows reported in the first nine months of last year. Interestingly, home investment in Q3 2024 was at $0.4 billion, meaning that the sector performed relatively better than before.
Overall, investment in real estate by institutions in the first three quarters of 2024 amounts to $4.7 billion, nearly identical to the investment volumes reached in the corresponding period in 2023. Industrial, warehousing, and housing assets accounted for more than 60% of these investments. In the current run, 2024 will most likely exceed the investment volumes seen in 2023.
Colliers India’s Managing Director, Piyush Gupta, opines that “Institutional flows in Indian realty remain consistent and indicate sustained investor confidence. The investor base is diversified and includes global and domestic capital. Office assets are a forte, but traction is being seen in industrial, warehousing, and residential as well. Newer trends such as fractional ownership and residential platforms have started opening avenues for investors.”
Foreign investment also picked up nicely, though from a very low base, at $0.6 billion in Q3 2024, more than doubling relative to the year-earlier quarter. Investments into offices rebounded nicely, to $0.6 billion, a 6.8x jump from Q3 2023, with foreign investments making up 88% of this segment’s inflows.
Chennai and Mumbai played a critical role in driving inflows of these investments, with their share accounting for around 57% of the total Q3 investments. Chennai accounted for almost 70% inflows from foreign investors, while 44% of the total investments in the residential sector came from Mumbai and Delhi NCR.
So, the domestic environment is favorable and interest rates should soften. Thus, investor confidence in the residential real estate market of India should remain strong, Vimal Nadar, Senior Director and Head of Research of Colliers India, says.
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