APAC Investment Surge Driven by Key Markets

In the second half of 2024, total real estate investments in APAC reached $83.2 billion, marking a 6% YoY growth. South Korea, Japan, and Mainland China led the market, collectively accounting for 59% of these investments. However, the highest YoY increases in investment volumes were observed in India, South Korea, Taiwan, and Australia, with each country recording over 30% growth.

Investment Growth in APAC (H2 2024 YoY)

India’s Real Estate Investment Momentum

India saw institutional real estate investments rise by 88% YoY in H2 2024, reaching $3.0 billion. The office segment remained dominant, attracting 47% of total investments, followed by industrial & logistics assets at 27%. Mumbai emerged as the leading investment destination within India, particularly for office acquisitions.

According to Badal Yagnik, CEO of Colliers India, “Institutional investments in Indian real estate increased by 22% in 2024, totaling $6.5 billion. This trend is expected to continue in 2025, supported by strong economic growth, policy support, and easing monetary conditions.”

Institutional Investments in India by Asset Class (H2 2023 vs H2 2024)

Breakdown of India’s Institutional Real Estate Investments

The following table provides a comparative breakdown of institutional investments across different asset classes in H2 2023 and H2 2024:

2025 Outlook: Steady Growth in APAC Investments

Industry experts predict that real estate investments in APAC will remain strong in 2025, fueled by economic growth, declining borrowing costs, and an increased focus on office, industrial, and logistics assets. The retail and hospitality segments are also witnessing renewed investor interest, with retail investments in APAC growing by 31% YoY to $15.0 billion in H2 2024.

Chris Pilgrim, Managing Director of Global Capital Markets at Colliers Asia Pacific, stated, “The APAC real estate market remains resilient, with institutional investments rising steadily. In 2025, the office segment will continue to thrive, while industrial, logistics, and residential sectors will remain in focus. Retail and hospitality will also see increased activity as investors capitalize on recovery trends.”

With favorable economic conditions and an influx of foreign investments—accounting for 57% of India’s total inflows in H2 2024—India’s real estate market is expected to maintain its growth trajectory in 2025. Both foreign and domestic investors are likely to continue diversifying their portfolios, particularly in high-yield segments such as office and industrial & warehousing.

SFI Analysis

India’s real estate market demonstrated strong investment momentum in H2 2024, with an 88% year-on-year surge, reaching $3.0 billion. Office assets attracted the highest share of investments at 47%, followed by industrial and logistics at 27%. Mumbai led the surge, driven by office asset acquisitions. Institutional investments, particularly from foreign entities, accounted for 57% of the total inflows, reflecting strong global investor confidence. With easing monetary policies and stable economic growth, investment activity is expected to sustain in 2025. Segments like retail, hospitality, and alternative assets may also gain traction, diversifying India’s real estate growth trajectory.

Also Read: APAC Investor Optimism to Drive Institutional Investments in Indian Real Estate in 2025

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Foreign institutional investors (FIIs) accounted for 63% of the total investments, highlighting the continued international interest in Indian real estate. Domestic investors also contributed significantly, accounting for 37% of the total, a marked increase from the average 19% share between 2019 and 2022. A notable development in 2024 was the substantial participation of domestic institutions in Qualified Institutional Placements (QIPs), which raised USD 2.7 billion for the real estate sector.

For the first time in years, the residential sector emerged as the highest recipient of institutional investments, capturing 45% of the total share, overtaking the office sector. Investments in residential real estate increased fourfold from the previous year, reaching over USD 4 billion. The shift toward residential investments was driven by a rise in equity contributions, which accounted for 54% of total residential investments, signaling stronger investor confidence in the sector’s potential.

Real Estate Investment Trusts (REITs) also saw significant activity in 2024, with investments reaching nearly USD 800 million, more than tripling from 2023 levels. Additionally, non-core assets, such as warehousing and data centers, made up 77% of total transaction volumes, reflecting a growing appetite for higher-risk investments. The warehousing sector, in particular, was boosted by a major transaction involving Abu Dhabi Investment Authority and KKR, which invested USD 1.5 billion in Reliance Retail Ventures’ warehousing assets.

Emerging sectors such as data centers, student housing, life sciences, and healthcare are also gaining investor interest, diversifying the Indian real estate landscape. The largest platform commitment of 2024 was a USD 1.7 billion partnership between RMZ Digital Infrastructure Partners and Colt Data Centre Services, highlighting the surge in investments in digital infrastructure.

Looking ahead, JLL expects continued growth and diversification in India’s real estate market in 2025, with emerging sectors attracting further investments. The anticipated launch of two InvITs in warehousing and a new REIT in mid-2025 signals the strong growth prospects for the sector in the coming years.

Also read: Real Estate Investment Surge; Industrial sector shines

The post Institutional Investments in Indian Real Estate Reach Historic Highs in 2024, Surpassing 2007 Record appeared first on Square Feat India.

Shobhit Agarwal, Managing Director and CEO of ANAROCK Capital, attributed the decline in office sector investments to the retreat of foreign investors, influenced by global factors such as geopolitical tensions and elevated interest rates. However, he noted that foreign investment in Indian real estate remained stable overall, primarily due to the landmark $1.54 billion warehousing deal between Abu Dhabi Investment Authority (ADIA) and KKR, involving Reliance Retail’s logistics and warehouse assets.

Industrial & Logistics Sector Rises to Prominence

In a major shift, the industrial and logistics sector dominated PE investments, capturing 67% of the total funding in the first half of FY25. This represents a significant surge from just 16% in the same period last year. The growth in this sector is driven by robust demand from manufacturing, e-commerce, consumption, and third-party logistics (3PL), with investors particularly favoring high-quality, Grade A assets that emphasize ESG (Environmental, Social, and Governance) criteria.

A standout deal in the first half was the Reliance-ADIA/KKR transaction, which accounted for approximately 67% of the total PE investments. This deal, involving warehouses located across multiple cities in India, was structured as a hybrid transaction, with 55% financed by senior debt, 41% through subordinated non-convertible debentures (NCDs), and the remaining balance in equity.

Decline in Office Sector, Rise in Residential Investments

While the industrial sector thrived, the office real estate sector saw a sharp 79% decline in PE investment. Foreign investors, who have traditionally been major players in this segment, appear to be retreating amid global uncertainties.

Conversely, residential real estate saw an uptick, with investments rising from 8% in H1 FY24 to 17% in H1 FY25. Despite challenges in the broader economy, residential investments grew as strong pre-sales and increased involvement from public sector banks in construction finance reduced the need for high-cost private equity funding.

Average Deal Size Increases Amid Fewer Transactions

The average ticket size for PE deals jumped by 23% year-on-year, primarily driven by the massive Reliance-ADIA/KKR warehousing transaction. This rise in deal size came amid a 29% reduction in the number of deals, pushing the average deal size from $104 million in H1 FY24 to $128 million in H1 FY25.

Hyderabad Emerges as Key Investment Hub

Hyderabad emerged as a leading destination for private equity investments in the first half of FY25, attracting $284 million, or 12% of the total PE investments in India. In contrast, Mumbai’s share dropped to 9%, down from 23% in the same period last year.

The report also highlighted the ongoing dominance of foreign investors in the Indian real estate sector, with foreign funds contributing 87% of the total investments in the first half of FY25, virtually unchanged from 86% in the previous year.

Equity vs Debt: A Shift in Funding Mix

Funding structures also showed a shift in H1 FY25. The share of debt in transactions increased to 17% from 10% in H1 FY24, while equity transactions dropped to 17%, down from 87% in the previous year. The large Reliance-ADIA/KKR deal, which involved a mix of debt and equity, largely accounted for this shift.

Sectoral Insights

ANAROCK Capital’s report also provided insights into sector-specific trends:

• Residential Sector: PE investments in residential real estate grew to 17% of the total deals, reflecting increased activity. However, the sector is expected to see reduced demand for high-cost private equity financing as more PSU banks enter the construction finance space.
• Office Sector: The office sector’s traditionally strong performance has been impacted by global challenges. Despite this, the office leasing market showed resilience, driven by the expansion of Global Capital Centres and flexible workspaces. Easing interest rates could revive investor interest in this segment.
• Industrial & Logistics Sector: The industrial sector remains a key area of focus for investors, particularly due to the growing demand for high-quality logistics infrastructure and a strong focus on sustainability.

In conclusion, the first half of FY25 marked a notable shift in the Indian private equity landscape, with the industrial and logistics sectors emerging as dominant investment areas. The outlook for the remaining half of the year will depend largely on global economic conditions, interest rate movements, and sector-specific performance trends.

Also Read: Logicap and Mitsubishi Estate Form Joint Venture for Industrial and Logistics Development in India

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