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This momentum is expected to continue in 2025, driven by favourable economic growth prospects and optimistic investment sentiments, says Badal Yagnik, chief executive officer of Colliers India.
Office assets continued to draw majority of the investments at 47 per cent share, followed by industrial & logistics at 27 per cent share and residential at 17 per cent share.
Institutional investment in Indian real estate continued to grow with India attracting $3,035 million in the second half of the calendar year 2024 against $1,616 million in the same period of 2023, registering a growth of 88 per cent, according to a report by real estate consultancy firm Colliers. Mumbai attracted almost half of the investments during H2 2024, primarily led by the acquisition of office assets.
According to Colliers’ latest report, titled ‘Asia Pacific Investment Insights H2 2024’, office assets continued to draw majority of the investments at 47 per cent share, followed by industrial & logistics at 27 per cent share and residential at 17 per cent share.
Badal Yagnik, chief executive officer of Colliers India, said institutional investments in Indian real estate have shown remarkable growth, with 2024 witnessing a 22 per cent rise in capital inflows at $6.5 billion.
“This momentum is expected to continue in 2025, driven by favourable economic growth prospects and optimistic investment sentiments. Moreover, the anticipated continuity in easing of monetary policy including further reduction in repo rate, is expected to enhance liquidity and drive transactional activity across real estate segments in 2025. Diverse investment opportunities along with proactive government policies are likely to support robust capital deployment across core and non-core assets throughout 2025,” Yagnik added.
According to the report, the office segment attracted $1,442 million investment in H2 2024, up 571 per cent from $215 million in the same period last year.
Peush Jain, managing director of commercial leasing and advisory, ANAROCK Group, said, “The Indian office market is poised to experience positive growth in 2025, driven by multiple favorable factors shaping the commercial real estate landscape. The steady revival of global economies, particularly in the technology sector, is expected to drive renewed demand for office spaces across India’s top 7 cities. This positive momentum builds upon the market equilibrium achieved in the latter half of 2024, setting a strong foundation for growth.”
The market’s performance will be influenced by the pace of global economic recovery and its effect on corporate decision-making. Despite these considerations, the fundamental drivers of India’s office market remain robust, suggesting a positive outlook for 2025, Jain added.
The residential segment also witnessed strong growth attracting $503 million investment in H2 2024, up 41 per cent from $356 million in the same period last year.
Ankur Jalan, CEO, Golden Growth Fund, a CAT-II real estate focussed Alternative Investment Fund (AIF), said India is experiencing a strong demand for housing on accounts of rising affluence and aspirations and facilitated by strong infrastructure growth and economic projection.
“With the new government in Delhi, the ‘double-engine’ growth model of the NDA government is bound to further heighten real estate demand in Delhi, particularly South Delhi, which will see increased investment from institutional investors and Alternative Investment Funds in the coming years,” he added.
Garvit Tiwari, Gurugram-based property consultant InfraMantra co-founder, said, “The investment flow in India’s real estate is testament to the country’s strong standing amongst its peers when it comes to mid-to-long term growth forecast, reflecting strong consumption demand. As a result, the demand for residential and commercial spaces in India’s top metro cities have performed extremely well in the last couple of years. We expect this trend to further solidify in the coming years.”
In H2 2024, foreign investments accounted for 57 per cent of total inflows, while domestic investments, at $1.3 billion, saw a notable 8 per cent YoY growth.
Vimal Nadar, senior director and head of research, Colliers India, said, “Steady growth in investment volumes underscores India’s prominence as a preferred real estate investment destination for both domestic and foreign capital. Investment inflows from other countries in the APAC region will remain buoyant in 2025 and are likely to account for a significant portion of institutional investments in Indian real estate.”
Looking ahead, while global investors will continue to diversify their real estate portfolios, domestic investors are expected to make further inroads in segments with relatively higher yields such as office and industrial & warehousing, Nadar added.
The real estate investments in the Asia Pacific market increased 12% year-on-year to reach $155.9 billion in 2024. South Korea, Japan, and Mainland China together accounted for 59% of total $83.2 billion real estate investments in H2 2024. India, South Korea, Taiwan, and Australia, meanwhile saw significant investment growth, each recording more than 30% year-on-year increases during the period.
Overall, real estate investment volumes in the Asia Pacific region are likely to remain sturdy in 2025, amidst easing inflation, healthy economic growth prospects and declining borrowing costs across major markets, the Colliers report added.