Private equity (PE) investments in Indian real estate reached US$ 4.2 billion (bn) in calendar year (CY) 2024, marking a 32% year-on-year (YoY) growth. The warehousing sector led the way, accounting for 45% of total investments, followed by the residential sector at 28% and the office sector at 26%. Knight Frank India, the leading international property consultancy, has released its latest report, Trends in Private Equity Investment in India 2024.
Notably, in 2024, PE investments more than doubled in the residential sector which saw a remarkable 104% increase in PE investments, amounting to US$ 1.2 bn in 2024, demonstrating investor confidence in this segment which has been noting a consistent rise in end-user demand.
The report observed a significant change in investor focus and sectoral preferences, with the warehousing sector surpassing the office sector, which had held the highest share of PE investments since 2017, underscoring the growing importance of warehousing as a key driver of private equity inflows into the Indian real estate market.
Mumbai is the most favoured destination with 50% of total PE investments in the city, driven by large volumes of investment in warehousing in the city, PE investment landscape in 2024, attracting US$2 Bn in 2024.
The warehousing sector dominated with 74% of the total PE investments in Mumbai, amounting to US$ 1,537 mn while the residential sector attracted US$406 mn, making up 20% of the total PE investment in the city. Bengaluru received total PE investments US$ 833 mn in 2024. Around 52% of these investments, amounting to US$ 430 mn, was towards the office sector, while the remaining 48% or US$ 403 mn, was invested in the residential sector.
Of the total PE investments made in 2024, the capital flow has been the maximum from UAE estimated at US$ 1.7 Bn, making up 42% of investments in India, followed by Indian investors who deployed investments US$ 1.3 Bn in 2024 forming 32% of the share of capital invested. Institutions and funds based in Singapore invested an estimated US$ 633.7 mn in Private Equity in India.
Investment in the warehousing segment showed a significant upward trajectory in CY 2024, reaching US$ 1.9 bn, a remarkable 136% increase YoY. Geographically, Mumbai and Chennai were the primary beneficiaries, attracting US$ 1,537 mn and US$ 288 mn respectively. Pune attracted US$ 52 mn worth of investments in this sector in 2024.
The warehousing sector emerged as the leader receiving highest investment in 2024, rising sharply to US$ 1.9 bn, from US$ 684 mn in 2023. PE investors are actively engaged in the warehousing market, particularly targeting subsectors such as e-commerce, logistics, and third-party logistics (3PL) facilities. Warehousing sector is experiencing robust growth due to the burgeoning e-commerce industry and an increasing focus of the companies on supply chain optimisation.
The inherent demand for warehousing is due to growing consumerism and manufacturing coupled with supportive government policies and growing demand from various industries, make it a compelling proposition for PE investors. The warehousing sector is poised to play a pivotal role in shaping the future of Indian real estate.
The residential sector attracted an investment of US$ 1.2 bn in 2024, marking a staggering 104% increase YoY. Geographically, investments in the residential sector were spread across India, with Mumbai leading with US$ 406 mn, followed by Bengaluru with US$ 403 mn, and Delhi-NCR with US$ 202 million. This distribution of investment underscores the nationwide appeal and potential of the residential market.
Unlike the previous year, PE investors adopting a more diversified approach in 2024, where investments were mainly directed toward under-construction projects. A significant portion of investments were deployed in early-stage positions, reflecting the growing confidence in the sector's future potential.
The office sector attracted US$ 1.1 bn in investments in 2024, with 82% directed towards ready assets and only 18% towards under-construction projects. However, the market saw a 38% YoY decline, primarily due to a shortage of investment-grade office supply. Bengaluru and Hyderabad emerged as key investment hubs, driven by strong economic growth and their prominence in India’s office space market, drawing significant PE interest.
Going by the track record of the past couple of years, the Indian real estate market is poised for robust growth in the coming years. The warehousing sector emerged as a key player in 2024. The residential sector, bolstered by strong demand and increased involvement from domestic PE investors, is a major growth catalyst. These trends are expected to continue, driven by strong economic fundamentals, rapid urbanisation, and favourable government policies.
While the office sector experienced a dip in investments in the year, demand for Grade A office spaces in prime locations remains strong, particularly from Global Capability Centres (GCCs) and India-facing businesses. The rising influence of domestic PE investors, especially in the residential sector, reflects increased confidence in the market and a better understanding of local dynamics. With strong domestic fund activity and the potential for a resurgence of foreign investment, the market outlook is promising.
