Real estate sector sees record equity investment since 2018: CBRE Report

The real estate sector in India has achieved a remarkable milestone, recording a total of USD 8.9 billion in equity investments during the first nine months of 2024, a 46% year-on-year increase from the USD 7.4 billion recorded for the entire year of 2023, according to a report by CBRE South Asia.

This surge marks the highest equity investment levels in the sector since 2018. The report highlights a significant quarterly equity investment of USD 2.6 billion from July to September 2024.

Mumbai, Bengaluru, and Chennai led the charge, collectively accounting for 66% of the equity inflows in Q3 2024, with investments of USD 0.96 billion, USD 0.40 billion, and USD 0.34 billion, respectively. Other major cities such as Delhi-NCR, Pune, and Hyderabad also saw substantial investments, with inflows of USD 0.31 billion, USD 0.27 billion, and USD 0.02 billion, respectively.

Domestic investors, primarily developers, were the main drivers of this increased investment momentum, contributing nearly 79% of the equity capital inflows during the July-September quarter. Among foreign investors, Singapore accounted for approximately 73% of the total inflows, followed by the United States at 22%.

Developers represented nearly 47% of the total equity investments, followed by institutional and collective vehicle investors at approximately 36%.

Anshuman Magazine, Chairman and CEO of CBRE India, South-East Asia, Middle East & Africa, commented, "Investment activity in India’s real estate market reached a new peak in the first nine months of 2024, driven by a resurgence in capital deployment in Q2 2024 (April-June)."

He added, "Sustained capital inflows are expected in both traditional and emerging sectors in the upcoming quarters, with developers, institutional, and collective vehicle investors driving overall capital flows."

The most attractive investment segments during Q3 2024 were land and development sites, which accounted for 45% of the total investments. The office sector attracted 24% of the investments, while the retail sector saw a resurgence with a 22% share of the capital inflows.

Within land acquisitions, approximately 56% of the capital was directed towards residential developments, while the remainder was allocated to retail, data centers, warehousing projects, hospitals, and other uses.

Additionally, investment and development platforms worth approximately USD 235 million were established in the hotels and residential sectors during the July-September quarter, further underscoring the sector’s growth trajectory.

The trend towards investments in metro and Tier-I cities is expected to continue, with increasing attention also being given to smaller Tier-II locations, especially following SEBI’s recent regulations on small and mid-sized real estate investment trusts (SM REITs).