BM Property: India’s real estate sector poised for record growth

Real estate equity investments in India are set to hit a record high in 2024, surpassing USD 10 billion for the first time. This surge is attributed to increased investment in office assets and a strong pipeline of residential land acquisitions. The report projects total equity investments in the sector to reach between USD 10 and 11 billion in 2024. From January to September 2024, institutional and collective vehicle investors accounted for nearly 40% of all capital inflows, with domestic investors—mainly developers—investing approximately USD 6 billion, representing nearly 65% of total capital inflows. Foreign investors contributed USD 3.1 billion, with North American and Singaporean investors comprising 85% of foreign inflows.

CBRE South Asia Pvt. Ltd in collaboration with the Confederation of Indian Industries (CII), unveiled a joint report titled ‘Leading the Charge: Crafting the Skylines of Tomorrow’ at the annual CII Realty 2024 conclave. The report highlights key trends and growth projections for India’s real estate sector, marking a pivotal moment in the industry’s evolution.

According to the report, equity capital inflows into India’s real estate sector reached USD 8.9 billion during the first nine months of 2024, marking a significant 46% year-on-year growth.

Deal volumes continued to rise, with around 200 transactions reported, up from 151 during the same period in 2023. The average deal size also saw an increase, reaching nearly USD 45 million compared to USD 36 million in the previous year. The office sector experienced a notable resurgence, with nearly 50% growth, while residential and mixed-use developments attracted substantial capital, with nearly 64% of land/development site investments directed toward residential projects. Gateway cities like Delhi-NCR, Mumbai, and Bengaluru accounted for more than 63% of the total capital inflows, with Delhi-NCR alone contributing approximately USD 2.3 billion (26% of total inflows). Debt financing in the real estate sector also reached a record high of USD 4.7 billion, more than doubling from the previous year. A significant portion of this financing, about 60%, was directed toward key markets like Delhi-NCR, Mumbai, and Bengaluru.

D Thara, additional secretary at the Ministry of Housing and Urban Affairs, emphasised the need for developers to create energy-efficient, sustainable spaces that align with India’s broader sustainability goals, stressing that real estate development should focus on creating thriving communities rather than just physical structures. Anshuman Magazine, chairman & CEO of CBRE India, highlighted the forecasted USD 10-11 billion equity investments in 2024 as a strong indication of continued investor interest. He noted the growing appeal of tier-II markets, especially with the introduction of SEBI’s SM REIT framework, which is expected to attract more capital and institutional participation. Anil Saraf, chairman of the CII NR Committee on Real Estate, pointed out the real estate sector’s critical role in India’s economy, driving GDP growth, and emphasised the need for collaboration and innovation to sustain this growth.