India’s Real Estate Sees 6% Growth in PE Investment

India’s Real Estate Sees 6% Growth in PE Investment

Private equity (PE) investment in Indian real estate surged by 6% in the April-December 2024 period, reaching an impressive $2.82 billion, according to the latest data from real estate consultancy firm Anarock. Despite a slight dip in the number of PE deals, from 30 deals in the same period the previous year to 24 deals in 2024, the overall investment value experienced an uptick. This reflects continued investor confidence in the sector, especially in industrial and logistics parks, which have become the dominant asset class for PE investments.

Anarock’s data reveals that foreign funds accounted for a substantial 82% of total PE investments during the first nine months of this fiscal year. This demonstrates the strong interest from global investors in the Indian market, despite the fluctuations in domestic economic conditions. The top 10 deals alone accounted for a staggering 93% of the total PE transactions, highlighting the fact that large-scale deals are continuing to drive the overall growth in the sector.

Notably, the industrial and logistics sector emerged as the clear leader, attracting 62% of the total PE investments. Housing, office, and mixed-use projects followed, with 15%, 14%, and 9% of the total share, respectively. Among the standout deals in this space was the $1.54 billion warehousing deal between Reliance, ADIA, and KKR, which significantly boosted the logistics and warehousing market. The logistics sector has become an increasingly attractive option for investors, driven by the growth of e-commerce, supply chain optimisations, and demand for modern warehousing facilities. Another major deal was the $204 million Blackstone-LOGOS equity deal, further affirming the sector’s appeal to investors.

The performance of the Indian real estate sector, especially in the PE domain, paints a picture of shifting investment priorities. While housing and office spaces traditionally captured significant portions of PE investments, industrial real estate – particularly logistics parks – has seen an unparalleled rise in demand. This shift can be attributed to the rapid digitalisation and growth of online retail, alongside evolving infrastructure development, which has enhanced the attractiveness of logistics as an asset class.

From a sustainability perspective, the focus on industrial and logistics parks aligns with growing environmental and urban planning concerns. The emphasis on creating smart, sustainable logistics hubs that minimise their carbon footprint and incorporate green practices is crucial in reducing the environmental impact of urbanisation. In this context, investors are showing increasing interest in green building certifications, sustainable architecture, and energy-efficient systems for new developments.

While the growth in PE investment reflects an optimistic outlook for the real estate market, challenges remain, particularly around the long-term sustainability of urban spaces. As India’s cities continue to expand, balancing economic development with environmental concerns will be key to ensuring that urban growth does not come at the cost of ecological damage. For now, the trajectory of PE investments into India’s real estate sector seems to be on a steady path, especially with industrial and logistics parks continuing to dominate the market.