Private Equity Investors Infuse 3 Billion dollars into Real Estate in H1 2024; Warehousing Dominates with Over 50% Share
Private equity investors have shifted their focus from office properties to warehouses, which made up more than 50% of their 3 billion dollars total investments in the first half of 2024.
According to a report by Knight Frank on “Trends in Private Equity Investment in India: H1 2024,” private equity (PE) investments in Indian real estate totaled $3 billion in the first half of 2024, representing a 15% increase from $2.6 billion in H1 2023.
warehousing sector received the largest share of PE investments at 52%, followed by residential (29%) and office (20%). PE investments in the residential sector saw a substantial 209% increase to $854 million in H1 2024, up from $277 million in H1 2023.Investor preferences have shifted, leading to the warehousing sector surpassing the office sector in PE investments. This trend is driven by the growing e-commerce industry and government initiatives to enhance logistics operations.
Mumbai experienced a significant increase in PE investment inflows, rising from $1.242 billion in H1 2023 to $1.701 billion in H1 2024. The warehousing sector in Mumbai accounted for 88% of total PE investments, amounting to $1.5 billion, while the residential sector contributed 12%, amounting to $201 million.
Bengaluru received approximately 20% of total PE investments, totaling $581 million in H1 2024. Of this, 69% of these investments, amounting to $403 million, were directed towards the residential sector, while 31%, or $178 million, went to the office sector.
Investment in the warehousing segment reached $1.532 billion in H1 2024, marking a 176% increase from $555 million in H1 2023. Mumbai and Chennai were the primary beneficiaries, attracting $1.5 billion and $32.3 million, respectively, in the warehousing sector.
The warehousing sector attracted the highest investment in H1 2024, largely driven by a single deal of $1.5 billion. PE investors targeted subsectors such as e-commerce, logistics, and 3PL (third-party logistics) facilities.
The residential sector garnered $854 million in H1 2024, representing a 209% increase. Investments were distributed across India, with Bengaluru leading at $403 million, followed by Mumbai with $201 million, and Delhi-NCR with $97 million.
According to Shishir Baijal, Chairman & MD of Knight Frank India, India has been considered a favorable destination for investments over the past decade due to its economic stability and growth.
Although recent economic conditions and higher inflation have caused funds from Western economies to take a cautious approach, the commercial real estate sector in India is still doing well. This is attributed to factors such as the return to work, increasing office occupancy, and rising rental values.
”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.
Registered Alternative Investment Funds (AIFs), regulated by SEBI, have raised around $5.3 billion since January 2021, focusing on residential, commercial, and logistics assets. Between January 2021 and H1 2024, Indian PE investors injected approximately $3.3 billion into the real estate market, with around $2.0 billion of undeployed funds available.
The growth of the residential sector is supported by strong demand and increased involvement from domestic PE investors. Although the office sector experienced a slowdown in investments in H1 2024, the demand for Grade A office spaces in prime locations remains robust.
