Knight Frank India in its latest report – Trends in Private Equity Investment in India: H1 2024, stated that private equity (PE) investments totalling $3 billion (bn) have been made in Indian real estate in the first half of 2024 recording an increase of 15% YoY from $2.6 bn in H1 2023. Warehousing sector accounted for the largest share of 52% of total PE investments in January – June 2024, followed by residential (29%) and office (20%). PE investments in the residential sector also saw a significant increase of over 209% to USD 854 million (mn) in H1 2024 from $277 mn in H1 2023.
Knight Frank India noted a change in investor dynamics and preferences within the private equity investments in the Indian real estate sector. While the office sector had been receiving the largest share of PE investments since 2018, it was recently overtaken by the warehousing sector. The warehousing sector has now become the most popular, drawing more investment than the combined totals of the office, retail, and residential sectors.
Mumbai dominated the PE investment landscape as the city witnessed a significant increase in PE investment inflows rising from $1,242 mn in H1 2023 to $1,701 mn in H1 2024. The warehousing sector accounted for 88% of the total PE investments in Mumbai, amounting to $1,500 mn while the residential sector contributed 12% amounting to $201 mn.
Bengaluru received approximately 20% of the total PE investments, totalling $581 mn in H1 2024. Around 69% of these investments, amounting to $403 mn were dedicated towards the residential sector. The remaining 31% or $178 mn, were invested in the office sector.
Shishir Baijal, chairman & managing director, Knight Frank India, said, “India has been favourably viewed for investments, especially in the last decade, due to economic stability and growth. However, recent economic conditions and higher inflation have led funds from western economies to adopt a wait-and-see stance. However, Indian commercial real estate continues to thrive due to factors like return to work, rising office absorption and strengthening rental values. Similarly, a year on year strengthening of residential market and continued consumer activities in retail further bolstered by economic growth has incentivised funds to adopt a long-term perspective towards investment in real estate. Looking ahead, we expect some easing of conditions in the western world which will bring back the investments from global players. This, combined with India’s growth trends, is expected to lead to increased investment activity from global funds.”
