Real estate growth: Private equity (PE) investments of $3 billion was recorded in the first half of 2024, which is 15% increase YoY from $2.6 billion in H1 2023. Warehousing sector accounted for largest share of 52% of total PE investments in January – June 2024, followed by residential (29%) and office (20%).
The real estate market in India is anticipated to experience significant growth in the years ahead. In H1 2024, the warehousing sector has emerged as a significant player, propelled by the expansion of the e-commerce industry and government efforts to enhance logistics operations. The residential sector, supported by robust demand and increased participation from domestic private equity investors, serves as a pivotal driver of growth. This trajectory is projected to persist due to India’s expanding population, swift urbanisation, and favorable governmental regulations.
Despite a slowdown in investments during the initial half of 2024, the office sector continues to witness strong demand for Grade A office spaces in prominent locations, primarily fueled by Global Capability Centres (GCCs) and India-focused enterprises.
PE investments in the residential sector also saw a significant increase of over 209% to $854 million in H1 2024 from $277 million in H1 2023, Knight Frank India said in its latest report.
Mumbai dominated the PE investment landscape as the city witnessed a significant increase in PE investment inflows rising from $1,242 million in H1 2023 to $1,701 million in H1 2024.The warehousing sector accounted for 88% of the total PE investments in Mumbai, amounting to $1,500 million while the residential sector contributed 12% amounting to $201 million.
Bengaluru received approximately 20% of the total PE investments, totalling $581 million in H1 2024. Around 69% of these investments, amounting to USD 403 mn were dedicated towards the residential sector. The remaining 31% or $178 million, were invested in Office sector.
“There is a shift in investor dynamics and sectoral preferences for private equity investments into Indian real estate sector. The office sector, which received the highest share of PE Investments since 2018, was surpassed by the warehousing sector, which became the most popular, attracting more investment than the combined totals of the office, retail, and residential sectors,” Knight Frank said.
Residential sector
The residential sector attracted an investment of $854 million in H1 2024, marking a staggering 209% increase. Geographically, investments in the residential sector were spread across India, with Bengaluru leading with $403 million, followed by Mumbai with $201 million, and Delhi-NCR with $97 million. This distribution of investment underscores the nationwide appeal and potential of the residential market.
PE investments received across India in Residential Sector
City Investment (USD mn)
Bengaluru 403
Mumbai 201
Delhi-NCR 97
Hyderabad 92
Pune 46
Chennai 15
Total 854
Source: Knight Frank Research, Venture Intelligence
H1 2024 saw PE investors adopting a more diversified approach, unlike H1 2023, where investments were mainly directed toward under-construction projects. A significant portion of investments went into early-stage positions, reflecting the growing confidence in the sector’s future potential.
Warehousing sector
Investment in the warehousing segment showed a significant upward trajectory in H1 2024, reaching $1532 million, a remarkable 176% increase from the $555 million recorded in H1 2023. Geographically, Mumbai and Chennai were the primary beneficiaries, attracting $1,500 million and $32.3 million, respectively, in the warehousing sector.
The warehousing sector emerged as the leader receiving the highest investment in H1 2024, rising sharply to $1,532 mn, from $555 mn in H1 2023, albeit backed by a single deal of $1,500 mn.
PE investors are actively engaged in the warehousing market, particularly targeting subsectors such as e-commerce, logistics, and 3PL (third-party logistics) facilities. Warehousing sector is experiencing robust growth due to the burgeoning e-commerce industry and an increasing focus of the companies on supply chain optimisation.
The inherent demand for warehousing due to growing consumerism and manufacturing coupled with supportive government policies and growing demand from various industries, make it a compelling proposition for PE investors. As the market matures and overcomes existing challenges, the warehousing sector is poised to play a pivotal role in shaping the future of Indian real estate, contributing significantly to the country’s economic growth and development.
Office Assets
The office sector received $579 mn in investments during H1 2024 with a clear preference for ready assets. A total of 77% of investments were directed towards completed projects, while only 23% allocated to under construction developments in H1 2024. The office market observed a substantial 67% YoY decline in H1 2024 compared to the previous year, reflecting the changing dynamics of the market.
Hyderabad, Bengaluru and NCR emerged as leading investment destinations for office investments in H1 2024. Hyderabad received the largest volume of investments 45% of the total PE investments in office sector.