Equity investments in Indian real estate are set to grow 49 per cent to $11 billion this calendar year amid strong demand for properties, according to a report by Confederation Indian Industries (CII) and real estate consultancy firm CBRE.
In the 2023 calendar year, equity investments in real estate stood at $7.4 billion. Debt financing in the sector has also reached a record high, rising to over $4.7 billion from January to September 2024, marking a more than two-fold increase year-on-year, the report said.
It noted that nearly 60 per cent of this debt financing targeted key markets, including Delhi-NCR, Mumbai and Bengaluru.
Multi-city deals were also significant, accounting for over 30 per cent of total debt financing in this period.
The report titled ‘Leading the Charge: Crafting the Skylines of Tomorrow’ was released by industry body CII and CBRE at the annual CII Realty 2024 conference on November 20, 2024. “Gateway cities such as Delhi-NCR, Mumbai and Bengaluru continued to be the preferred markets with a cumulative share of over 63 per cent in investment inflows in January-September 2024.
Delhi-NCR witnessed the highest share of capital inflows at 26 per cent (amounting to $2.3 billion). Equity capital inflows to tier-II and III cities also reached nearly $0.6 billion, with Ludhiana, Mohali, Tuticorin, Hubli, Coimbatore and Indore collectively accounting for 76 percent of these inflows,” the report pointed out. Equity capital inflows between January and September reached $8.9 billion, registering a 46 per cent year-on-year growth.
“Total equity investments in the real estate sector are set to set a new record in 2024, crossing $10 billion for the first time,” the report said. With a resurgence in investment flows in built office assets and a strong acquisition pipeline for land in the residential sector, total equity investments in 2024 will be in the range of $10-11 billion, it added.
During January-September, institutional and group vehicle investors accounted for nearly 40 per cent of total investments. Domestic investors (mainly developers) invested nearly $6 billion during the first nine months of the calendar year, dominating the overall capital inflows with a nearly 65 per cent share. In comparison, foreign investors contributed about $3.1 billion during the same time period. Notably, North American and Singaporean investors were significant contributors, representing nearly 85 percent of all foreign capital inflows.
Developer companies led total capital inflows with over 41 per cent share during the period. Anshuman Magazine, Chairman and CEO, CBRE, said, “Equity investments, estimated to be between $10-11 billion in 2024, the highest ever, reflect the continued interest of investors in the growing real estate market in India.” He added that with SEBI’s SM-REIT framework, smaller but high-quality assets in tier-2 markets will also offer new avenues for strategic capital investments.
“We believe this regulatory support will add much-needed transparency, enabling a more diversified investment base and boosting institutional participation in these markets,” Magazine added. Going forward, this increasing diversification will not only strengthen India’s real estate sector but also pave the way for future growth in emerging asset classes, he added.
Addressing the gathering, D. Thara, Additional Secretary, Ministry of Housing and Urban Affairs (MoHUA), emphasised on sustainable development in the real estate sector. He said that in the current scenario, where the real estate sector is on its growth trajectory, there is a need to adopt a holistic approach to create sustainable solutions.
“Looking beyond the traditional concepts of living, we must create spaces that are energy efficient and align with overall sustainability goals. As responsible builders, we must not just build wealth but build real lives by creating communities that promote harmony and add value to life,” he said.
