Indian office investments register a sixfold surge

The Indian real estate sector is witnessing strong institutional investment, particularly in office spaces and residential assets. In the third quarter of 2024, investment inflows reached around US$1.1 billion. Foreign investments were crucial, making up 88% of total inflows. Chennai and Mumbai attracted 57% of the inflows.

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India’s real estate sector witnessed significant institutional inflows in the September quarter of 2024, reflecting strong confidence from both domestic and international investors. Office segment accounted for 54% of the total investments during the third quarter, followed by residential, with a 33% share, a report by Colliers has said.

Total institutional investments reached US$ 1.1 billion, marking a 45% increase compared to the previous year. Notably, the office segment rebounded dramatically, with investments surging 6.8 times year-on-year to US$ 600 million, following an 83% decline to US$ 329.6 million in the June quarter. This resurgence was driven largely by foreign investments, which accounted for 88% of office segment inflows, supported by major deals from global funds like ADIA, GIC, Keppel Land, and MapleTree.

The residential sector also experienced robust inflows, totaling US$ 400 million, up 40% from the previous year. Major cities such as Chennai and Mumbai attracted significant investments, comprising about 57% of total inflows, with Chennai seeing nearly 70% of its investments from foreign sources. In the residential market, Mumbai and the Delhi NCR region attracted about 44% of total investments, primarily in developmental assets as institutional investors partnered with reputable developers for prominent residential projects.

In the first half of 2024, total institutional inflows amounted to US$ 4.7 billion, showcasing a healthy appetite from both local and foreign investors. The demand for office space has seen a notable resurgence, especially in cities like Bengaluru, Hyderabad, and Mumbai, where leasing activity has reached or surpassed levels from 2023. Major corporations, including BNY Mellon, Salesforce, and Bosch, have secured large office spaces between 600,000 and 900,000 square feet, further driving the momentum in the realty sector.

Mr Piyush Gupta, Managing Director, capital markets & investment services at Colliers India stated, “The investors are well diversified between global and domestic capital. While office assets remain a key focus, industrial & warehousing and residential segments are gaining significant momentum. The newer emerging themes like fractional ownership in office & warehousing, residential platforms with developers, flexible credit, and hospitality are driving opportunities for investors. With continued momentum, 2024 is expected to end on a higher note, likely surpassing 2023 volumes.