The recent turbulence in the Indian stock market, leading to steep corrections, has left investors wary. The ongoing correction began in late September 2024 after record highs in both the Nifty 50 and Sensex indices - since then, these key indices have declined markedly and continue to bleed. In sharp contrast, the fundraising momentum through Qualified Institutional Placements (QIPs) struck high notes in 2024, finds ANAROCK research.
While retail and short-term investors react to volatility cautiously, institutional investors have been doubling down on long-term growth opportunities in Indian real estate. Overall, fundraising via QIPs across sectors hit an all-time high in 2024, with 99 issues raising over Rs 1,41,482 crore. This issue marks a 75 per cent increase over the previous all-time high of Rs 80,816 Cr in 2020.
In 2023, 43 QIP issues raised about Rs 55,109 Cr across sectors, closely matching the total QIP fundraising of Rs 56,152 Cr in 2017. The real estate fundraising trend through QIPs in 2023 was nil, meaning developers did not raise funds via this route that year.
In 2024, the Nifty and Sensex reflected significant volatility in the Indian equity markets. Nifty 50, representing large-cap stocks, showed a bracing upward trend in H1 2024 thanks to robust corporate earnings, increased foreign institutional investment, and positive economic indicators such as GDP growth and declining inflation rates. However, the year saw considerable volatility due to global geopolitical tensions, fluctuating oil prices, and shifts in global monetary policies. Market corrections towards the latter part of 2024 saw investors react predictably to tightening fiscal policies and profit-booking activities.
Despite volatility, five Nifty indices surged over 30 per cent in 2024- and notably, the Real Estate index secured the 4th spot, posting a strong 34.67 per cent annual gain.
The overall volatility, particularly in H2 2024, suggests a mixed outlook for QIP funding in the real estate sector in 2025. While tightening fiscal policies and global uncertainties may temper broader equity market sentiment, the strong performance of the Real Estate index despite volatility is a testament to sustained investor interest in the realty sector.
Given that QIPs are driven by institutional investor confidence, there are strong indications that large and listed developers will continue to draw significant funding in 2025. Investors seeking stability amid broader market fluctuations will see real estate as a good hedge against volatility. Additionally, suppose global monetary policies stabilise, and domestic economic indicators remain positive. In that case, QIP activity in Indian real estate will gain momentum and continue to fuel expansion, land acquisitions, and debt refinancing among these players.
