Institutional investors and developer companies to drive capital inflows.
In a joint report titled, ‘Leading the Charge: Crafting the Skylines of Tomorrow’ by CBRE and CII, it has been claimed that the overall equity investments in 2024 in the real estate sector are set to hit a new record surpassing USD 10 billion for the first time. With a resurgence in investment inflows in built-up office assets and a strong acquisition pipeline for land in the residential sector, overall equity investments in CY 2024 would be anticipated to in the USD 10 – 11 billion range.
This year, institutional and collective vehicle investors continued to be a major source of capital deployment in the Indian real estate sector, accounting for nearly 40% of the overall investments from January to September 2024. Developer companies led the total capital inflows with more than 41% share in this period. Domestic investors (predominantly developers) invested nearly USD 6 billion during the first nine months of the calendar year, dominating the overall capital inflows with an almost 65% share. In comparison, foreign investors contributed about USD 3.1 billion during the same timeframe.
Notably, North American and Singaporean investors were the significant contributors, representing approximately 85% of all foreign capital inflows.
Equity capital inflows touched USD 8.9 billion between January and September, registering a 46% Y-o-Y growth. The strong momentum in deal volume continued, with about 200 deals reported during this period, compared to 151 deals in the same period last year. The average deal size also increased to nearly USD 45 million in the first nine months of 2024 from about USD 36 million in 2023. Mid-sized deals, ranging between USD 10-50 million, represented 56% of the total investment inflows during this period.
The office sector witnessed a resurgence of inflows during January-September 2024, with a nearly 50% Y-o-Y growth. Land/development sites and the office sector cumulatively attracted more than 70% of the investment flows during this period. Residential, retail, and mixed-use sectors also experienced a significant rebound in capital inflows, capturing a healthy share of the overall capital inflows in the first nine months of 2024.
Nearly 64% of the capital inflows in the land/development sites went into residential developments, and the rest were allocated to mixed-use developments, warehousing projects, and the development of retail, data centre, and hospital projects.
Gateway cities such as Delhi-NCR, Mumbai, and Bengaluru remained the preferred markets with a cumulative share of over 63% in investment inflows in January-September 2024; Delhi-NCR witnessed the highest share of ~26% in capital inflows (amounting to ~USD 2.3 billion). Equity capital inflows into tier-II and III cities also reached nearly USD 0.6 billion, with Ludhiana, Mohali, Tuticorin, Hubli, Coimbatore, and Indore collectively accounting for ~76% of these inflows.
Debt financing in the real estate sector soared to a new peak in January-September 2024, surpassing USD 4.7 billion and marking a more than twofold increase compared to the same period last year. A significant portion of this financing, around 60%, was channelled into key markets such as Delhi-NCR, Mumbai, and Bengaluru, underscoring their pivotal role in the sector’s growth. Moreover, the sector’s adaptability was evident in the prevalence of multi-city deals, which accounted for over 30% of the total debt financing share.
D. Thara, Additional Secretary, Ministry of Housing and Urban Affairs, Government of India, said, “In the current scenario where the real estate sector is on its growth trajectory, we should take a holistic view to create solutions that are sustainable. Looking beyond the traditional concepts of living, we must build spaces that are energy efficient and aligns with the overall sustainability goals. As responsible builders, we must not just build assets, but real lives by creating communities that fosters harmony and add value to life.”
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said,”Projection for 2024 equity investments between USD 10 -11 billion, highest-ever, underscores continued investor interest in the growing real estate market in India. However, with SEBI’s SM REIT framework, smaller but high-quality assets in tier-II markets will also present new avenues for strategic capital deployment. We believe this regulatory support will add much-needed transparency, enabling a more diversified investment base and encouraging institutional participation across these markets. Going ahead, this growing diversification will not only solidify India’s real estate sector but also pave the way for future growth across emerging asset classes.”
Anil Saraf, Chairman, CII NR Committee on Real Estate and CMD, ASF Group, said, “The real estate sector is a cornerstone of India’s economy, contributing significantly to GDP and employment. Its role extends beyond construction and housing, driving growth in ancillary industries. Glad to be part of this insightful initiative that not only created a roadmap for fostering collaboration and innovation, but also served as a beacon for the sector which is poised for sustained growth, with urbanization, rental market expansion, and property price appreciation driving its future trajectory.”
Ashwinder R Singh, Co-Chairman, CII NR Committee on Real Estate and Vice Chairman and CEO, BCD Group, said, “The future of Indian real estate lies in our ability to harmonize innovation with sustainability. As we craft tomorrow’s skylines, our industry must lead with a triple-bottom-line approach – combining economic viability, environmental responsibility, and social impact. The discussions at CII Realty 2024 reinforce that we’re not just building structures; we’re creating living, breathing ecosystems that will power India’s urban transformation for decades to come.”
Kalyan Chakrabarti, Conference Chairman and CEO, EMAAR, said, “This 20th annual conference of CII, real estate chapter – titled “leading the charge – crafting the skyline” typifies the need of the hour. Leading from the front and crafting – thus acknowledging societal, environmental and stakeholder sensitivity while doing development, is extremely relevant. I wish CII and all the members the best.”
Investment Outlook
Equity Investment Forecast: Overall equity investments in India’s real estate are projected to reach USD 10-11 billion in 2024, spurred by increased inflows in built-up office assets and a strong acquisition pipeline for land in the residential sector.
Primary Markets: Metro and tier-I cities will remain the primary destinations for equity inflows, but SEBI’s SM REIT regulations would also create investment opportunities for high-quality, smaller assets in tier-II cities.
Infrastructure Sector Growth: Private equity investments in public assets within infrastructure are expected to enhance accountability and operational efficiency.
Healthcare Investment: Due to its capital-intensive nature, the healthcare sector is anticipated to attract stable, long-term capital inflows.
Sustained Data Centre Investment: Investment momentum in data centres is anticipated to persist in the coming quarters.
Renewables Sector Boost: A growing emphasis on sustainability is likely to drive more investments in the renewable energy sector.
SEBI’s SM REITs Impact: SEBI’s SM REITs framework aims to bring greater transparency to the market, with CBRE estimating a potential market size in India of over USD 60 billion by 2026.
Long-Term Investment Strategies: Growth and controlling stake/buyout strategies reflect investors’ long-term commitment to India’s real estate market. The increasing deal volumes suggest a broader range of assets are securing debt and equity funding.
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