India real estate investment inflows hit a record USD3.9b in H1 2024

Thanks to strong inflows from Q2, which grew by 39% to USD2.8b.

According to a report from Cushman and Wakefield, Q2 2024 witnessed massive investment inflows amounting to INR 231.5 Bn (USD 2.77 Bn), marking a 1.5x growth quarter-on-quarter and a 39% increase year-on-year. 

The Logistics & Industrial (L&I) segment led the charge, accounting for a dominant 56% of quarterly investments taking the quarterly inflow into the segment four times higher than last 12 quarter average. 

Here’s more from Cushman and Wakefield:

Foreign investors played a significant role, contributing 76% of the total investments, with 73% of their funds directed towards the L&I sector and the remainder into office and residential segments. About 82% of the total quarterly inflow was deployed in asset acquisition deals. 

Notably, 62% of the total quarterly inflows were deals with combination equity and structured debt (mixed type) while pure equity infusion deals constituted only 25%. Multi-city deals were dominant, with 59% share in quarterly inflows; while in city focused investments Delhi NCR witnessed 19%, followed by Hyderabad (10%) and Bengaluru(8%). 

For the first half of 2024, investment flows reached a record high of INR 322.8 Bn (USD 3.9 Bn), driven largely by strong Q2 inflows. This represents an 80% increase compared to the same period last year. The L&I sector dominated, capturing 41% of the total H1 inflows, followed by the office sector at 31% and the residential sector at 26%. Amongst cities, Bengaluru emerged as the leader with 13% of the investment share, while a significant 42% of the investments were spread across multiple cities in H1 2024.

Tepid Fund-Raising Activity in Q2, Outlook for H2-2024 looks better 

Second quarter marked lukewarm fundraising activity totaling USD 238.2 Mn, predominantly driven by the office segment accounting for 84% of the total. H1 2024 recorded USD 800 Mn in fundraising. However, there is optimism as Embassy REIT plans to secure USD 400 Mn in funds, earmarked for debt repayment and strategic land acquisitions in Chennai. Furthermore, ASK property fund is looking to raise USD 239 Mn mostly targeting self-liquidating mid-income and affordable residential segments in prominent cities like Bengaluru, Pune, Mumbai and Delhi-NCR.

InvITs & REITS 

Within months of SEBI's notification, several fractional ownership platforms have begun registering under the SM REIT regulations for income-generating properties, including commercial assets and rental housing. Brookfield REIT is set to acquire a dominant stake in 3.3 msf portfolio at Worldmark Aerocity, New Delhi worth USD 720 Mn. Looking ahead, IndoSpace is planning to float an InvIT to raise USD 700-800 Mn, marking this as the largest L&I InvITs to be listed till date. 

Corporate Transactions in Real Estate 

The quarter recorded corporate transaction volumes of INR 38.02 Bn (USD 456 Mn), a 1.9 X jump q-o-q and a 75% jump on a y-o-y basis. Mumbai continued to drive transaction value with 55% share in total, followed by Hyderabad at 18% share. The first half of 2024 witnessed close to INR 29.10 Bn (USD 610 Mn) transactions, 75% to 1.28 times higher than the same period in the last two years.