In 2024, institutional investment in Indian real estate surged by 51%, reaching an impressive US$ 8.87 billion (Rs. 75,324 crore), according to a report by JLL India. This marks a significant rise from US$ 5.88 billion (Rs. 49,933 crore) in 2023, indicating a strong and growing interest from both domestic and foreign investors in India’s real estate sector. This record investment surpasses the previous peak of US$ 8.4 billion (Rs. 71,333 crore) in 2007, highlighting the robust demand in the sector, particularly in the housing, office, and warehousing segments.

Growth in Investment: Housing, Office, and Warehousing Lead the Way

The residential sector has been the primary driver of this growth, attracting 45% of total investments, followed by office buildings with 28% and warehousing properties at 23%. As per JLL India, the real estate sector in India is benefiting from a combination of factors such as strong demand for housing due to the growth in the middle-class population, and the increasing demand for warehousing spaces fueled by the booming e-commerce industry. Despite a slight dip of 17% in the office sector investments, the residential segment continues to show promising results, making it an attractive option for institutional investors.

Foreign vs. Domestic Investors: A Shift in Investment Dynamics

One of the notable shifts in 2024 is the rise in participation from domestic investors, who now account for 37% of the total investments, up from an average of 19% between 2019 and 2022. This shift indicates the increasing confidence of Indian investors in the country's real estate market, driven by stable economic growth and favorable investment conditions. Foreign Institutional Investors (FIIs) still dominate, contributing a substantial 63% of the total investments, but the growing domestic interest signals a healthy diversification of the investor base.

REITs and QIPs: The Future of Real Estate Investment

Real Estate Investment Trusts (REITs) have seen a remarkable increase, with investments tripling to nearly US$ 800 million (Rs. 6,749 crore) in 2024. This growth is particularly significant given the ongoing interest in alternative investment opportunities. As more companies are expected to go public, Qualified Institutional Placements (QIPs) are expected to play a vital role in capital raising for real estate projects.

The report by JLL India also highlighted that despite the downturn in office sector investments, residential real estate remains a lucrative segment for institutional investment. This growth in the residential sector is expected to continue as the demand for housing continues to rise, driven by factors such as urbanization, rising incomes, and government policies promoting affordable housing.

Impact of Investment on the Indian Real Estate Market

This surge in institutional investment is expected to have a positive ripple effect across the entire real estate market in India. With strong backing from both domestic and foreign investors, India’s real estate sector is poised to grow further in 2025 and beyond. The increase in warehousing and office space investments is expected to support the industrial and commercial real estate sectors, while residential real estate will continue to cater to the growing demand for housing.

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