Investment in housing segment zooms 3x to Rs 5,743 cr in Q1

Blurb: Residential sector dominated with 63% of quarterly investment. In absolute terms, it is almost double the quarterly average for residential seen in the past eight quarters. Almost 48% of investment in the residential sector was focused on early stages of development across top cities

New Delhi: Investments in residential real estate jumped more than three times in January-March to Rs 5,743 crore, contributing 63 per cent to the overall inflow in the real estate sector, according to Cushman & Wakefield.

In its capital markets report released on Wednesday, real estate consultant Cushman & Wakefield highlighted that the investments in real estate rose to Rs 9,124 crore during the first quarter of the current calendar year from Rs 8,830 crore in the year-ago period.

Of the total investment, the inflow in the residential segment jumped to Rs 5,743 crore from Rs 1,735 crore. In the office assets, the investments grew marginally to Rs 2,248 crore from Rs 2,180 crore. However, the investments in mixed-use projects fell to Rs 865 crore from Rs 1,645 crore.

The Industrial & Logistics segment, too, witnessed an inflow of Rs 268 crore, a sharp fall from Rs 2,170 crore in the first quarter of 2023. Hospitality projects did not garner any interest from investors during January-March 2024 as against Rs 1,100 crore in the year-ago period.

Somy Thomas, Managing Director, Valuation and Advisory and Capital Markets, Cushman & Wakefield said, "Q1,2024 witnessed another strong quarter of capital inflow into the Indian real estate sector, with the residential sector dominating on the back of renewed customer and investor confidence."

"This strong performance has attracted investor attention, leading them to put money into a market projected for further growth," said Thomas.

Domestic investors' uptick in investment numbers continued in the March quarter, which will provide further protection from any potential global headwinds, the consultant said.

"As we enter the new financial year, we expect this momentum to continue, with potentially more diversified investments in the future," Thomas said. As per the report, the investment in real estate stood at around Rs 9,130 crore ($1.1 billion) in Q1 this year, which was 39 per cent lower than the preceding quarter and 3 per cent higher year-on-year.

"Residential sector dominated with 63 per cent of quarterly investment. In absolute terms, it is almost double the quarterly average for residential seen in the past eight quarters. Almost 48 per cent of investment in the residential sector was focused on early stages of development across top cities," the consultant said.

The uptick in the share of domestic investors witnessed in 2023 continues in Q124, with their share accounting for 57 per cent of total quarterly investments, whereas foreign investors and collaborative (or mixed) deals comprised the remaining. Bengaluru emerged as the leading city, commanding a 25.6 per cent share in investments. Pune secured the second position in investment volume, claiming a 14 per cent share.

"Equity investments' share in total investments stood at 58 per cent, rendering it the lowest share that equity has seen in over eight quarters, largely driven by high-interest rate environment and global geopolitical uncertainties. Conversely, debt investments surged to double the quarterly average level of the last eight quarters, and almost all of that was directed towards the residential sector," the report said.