Equity investments in India’s real estate market reached a record high of $11.4 billion in 2024, a 54% increase over, 2023. Mumbai and Delhi-NCR received about a quarter of all investments, followed by Bengaluru (14%), Chennai (8%), and Hyderabad (6%).
Real Estate Market’s Global Comparison to other Countries
At around $4.3 trillion, the U.S. real estate market is significantly more extensive and more developed. China’s massive real estate market faces challenges from regulatory crackdowns, developers with excessive leverage, and a slowing economy. European Union’s stable real estate market is challenged by environmental regulations and high prices that prioritize sustainable development.
In 2024, $11.4 billion in equity investments were made in India, with 70% coming from domestic investors and the majority from major international players like the US, Canada, and Singapore. Focus on development sites (39%), office spaces (32%), and residential projects. Despite providing investors with liquidity and transparency, REITs dominate the real estate investment market in the United States and Canada.
In Europe, mixed-use projects and green buildings are common real estate investments. Due to policy risks and market saturation, China struggles to attract foreign investment.
Given the magnitude of the middle class in India, the market for affordable housing is vital. Initiatives like PMAY (Pradhan Mantri Awas Yojana) aim to provide housing for all. The high demand for housing brought about by urban migration has opened up opportunities in Tier 2 and Tier 3 cities.
Other nations, such as the U.S. and the EU, are raising housing costs, making it more difficult for middle-class individuals to obtain housing. The issue of affordability is growing. Housing costs are high in major cities, and China’s overabundance in smaller cities causes imbalances.
India’s PropTech adoption is accelerating thanks to platforms for digital transactions, property management, and construction technology. Projects to create “smart cities” integrate technology into the city’s layout. In other Countries that emphasized IoT integration, green buildings, and AI for real estate analysis, the U.S. and the EU are at the forefront of PropTech innovation. Big data and artificial intelligence are widely used in China, although PropTech platforms are less open there.
Challenges to the Indian Real Estate Market in Comparison to other Countries
India’s challenges include regulatory bottlenecks, land acquisition issues, and inadequate infrastructure. The transition to sustainability in the real estate sector is still relatively slow. Adherence to environmental, social, and governance (ESG) goals is important when comparing countries in focus for developed markets like the U.S. and the EU. China’s indebted developers draw attention to the risks associated with rapid urbanization
In India, returns on investment (ROI) are very promising, particularly in emerging cities like Bengaluru, Hyderabad, and Pune. The expanding e-commerce industries are driving the need for office space and warehouses. Compared to other mature markets like the U.S. and Europe, which offer a consistent return on investment, albeit a lower one due to market saturation, although smaller than India, emerging markets in Southeast Asia and elsewhere offer comparable opportunities.
Conclusion
To summarize, there is plenty of room for expansion, domestic demand, and government support for affordable housing and infrastructure in India. Despite its appealing returns, it lags behind more developed markets like the United States and the European Union regarding transparency, PropTech adoption, and sustainability initiatives. India’s growth trajectory is more balanced than China’s, with fewer systemic risks, significant untapped potential in smaller cities, and new asset classes like co-living and warehousing.
