Institutional investments in India’s real estate market are increasingly dominated by foreign companies and investors, which now make up 54% of all investments. According to the Vestian Research report, 54% of institutional investments from foreign companies will account for India’s real estate market in 2024, less than the 65% recorded in 2023. Indicating foreign companies confidence in the country’s expanding real estate sector.
Highlights of the Vestian Report
Increased investment value is highlighted in Vestian’s report. After declining for four years, institutional investments in Indian real estate saw a 36% increase in value, reaching $6.8 billion in 2024. A slowdown in the IT/ITeS sector is indicated by commercial real estate now making up 35% of the market, down from 61% in 2023. Rapid growth in e-commerce drove a 203% increase in industrial and warehousing investments, which accounted for 28% of total inflows. Residential real estate saw a 171% increase over the previous year, inflows totalling $2 billion, or 30% of total investments. Co-investments by foreign and domestic investors increased 61 times, accounting for 16% of total inflows.
India’s Real Estate Market
This trend reflects collaborative approaches to reducing global economic uncertainty. Domestic investors made up 30% of total investments, representing a 36% increase in value terms. India’s fast urbanization and economic expansion have created a high demand for real estate in the residential, commercial, and industrial sectors. Investor confidence has grown due to policies like the Real Estate (Regulation and Development) Act (RERA) and the easing of FDI regulations.
There is now a lot of interest in commercial real estate worldwide due to the expansion of IT parks, co-working spaces, and logistics hubs. India’s real estate market offers competitive returns, attracting foreign investors compared to developed markets. Due to REITs’ success in India, foreign investors can now quickly enter the market.
Office buildings and IT parks are examples of commercial real estate, especially in Bengaluru, Hyderabad, and Pune. Affordable and mid-segment housing projects with government incentives are the main focus of residential real estate. As a result of the expansion of e-commerce, there are more warehousing and logistics hubs. The market for data centres in India is growing quickly due to rising internet usage and digitization.
A Resilient Investment Destination with Policy Support and Global Challenges
Global economic conditions and inflationary pressures may impact investment flows, and despite greater transparency, foreign entities still encounter difficulties with local regulations. Complexities in land acquisition may delay the completion of a project. Foreign organisations are anticipated to continue to control institutional investments as long as government policies are supported. India’s real estate market continues to be a profitable choice for international investors, especially with the potential for further capital inflows in the years to come.
