India’s real estate investments reached a record $6.5 billion in 2024

India’s real estate investments reached a record $6.5 billion in 2024

India’s real estate sector has seen an unprecedented surge in institutional inflows in 2024, with total investments reaching a remarkable $6.5 billion, marking the highest level of investment since 2020. This surge reflects a robust 22% year-on-year growth compared to the previous year’s $5.4 billion, with the fourth quarter alone accounting for $1.9 billion in inflows. The positive momentum seen in Q4 is a crucial indicator of market confidence, underpinned by a mix of both domestic and international investors. Domestic investors contributed significantly to the final quarter’s surge, representing 43% of the total inflows. This trend is indicative of a growing trust among India-based institutional players, alongside continued optimism from global investors.

A significant development this year has been the industrial and warehousing sector’s dominance in investment volumes, securing 39% of the total inflows. The surge in demand for logistics and warehousing facilities comes as India continues to witness a rise in manufacturing and industrial growth, mirrored by positive indicators such as the Manufacturing Purchasing Manager’s Index (PMI) and the Index of Industrial Production (IIP). In contrast to this, the office space sector has faced a slight decline, with investments down 23% year-on-year, totalling $2.3 billion. However, residential real estate has also shown encouraging growth, with inflows reaching $1.1 billion, marking a significant 46% increase from 2023 levels.

Foreign investments continued to be the primary driver of India’s real estate market, contributing $4.3 billion or 66% of total investments in 2024. Asia-Pacific (APAC) investors, in particular, played a pivotal role, accounting for nearly one-third of the foreign inflows. The continued emphasis on infrastructure development, coupled with government initiatives such as the ‘Make in India’ programme, has enhanced India’s appeal to international investors. Tier-I cities, particularly those with robust infrastructure and business-friendly policies, remain at the centre of investment activity. As we look ahead to 2025, it is anticipated that domestic players will increasingly channel capital into residential, office, and industrial sectors, contributing further to India’s real estate growth.

The geographical spread of investments in India continues to reflect the country’s shifting real estate dynamics. While Mumbai remains a dominant player, accounting for 24% of total investments with inflows of $1.6 billion, cities like Bengaluru, Chennai, and Delhi NCR are also emerging as attractive destinations for real estate investments. These cities collectively hold around 8-9% of the market share each, driven by expanding infrastructure and the growing demand for both commercial and residential spaces. In Mumbai, the office segment continues to draw the largest share of investments, but industrial and warehousing assets are also receiving significant attention.

From a sustainability perspective, India’s real estate market is increasingly aligning with global trends towards green buildings and eco-conscious developments. As industrial and warehousing investments grow, the demand for sustainable and energy-efficient properties is rising. Warehousing developers are adopting green building standards to reduce environmental footprints, focusing on energy-efficient designs, water conservation, and waste management systems. As the country’s real estate sector continues to develop, these sustainable initiatives will play a crucial role in reducing the sector’s carbon footprint and promoting long-term environmental sustainability.