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

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In addition to AIF investments, the real estate sector also raised ₹12,801 crore through Qualified Institutional Placements (QIPs) during the same period, further emphasizing the strong investor confidence in the market. These investments highlight the sector’s growing appeal, bolstered by increasing demand and a steady reduction in unsold inventory in major cities across the country.

The sector’s performance is driven by a growing reliance on equity financing, particularly through Category II AIFs, which include real estate funds, private equity, and debt funds. Over the past five years, Category II AIFs have accounted for nearly 80% of total AIF commitments, reflecting their flexibility and tailored investment strategies.

Foreign Portfolio Investors (FPIs) have also ramped up their involvement, with their participation in Category II AIFs now matching that of domestic investors in funding key real estate projects.

Prashant Sharma, President of NAREDCO Maharashtra, highlighted the crucial role of AIFs in bridging funding gaps within the real estate sector. “The record ₹75,468 crore invested in real estate through AIFs in H1 FY25 underscores the sector’s resilience and growth potential. With strong sales in major cities and declining unsold inventory, investors are recognizing the sector’s long-term value. AIFs are not just funding projects—they’re shaping the future of urban infrastructure and housing in India,” he said.

Kuldeep Jain, Founder and CEO of Build Capital, also emphasized the transformative impact of AIFs on the real estate landscape. “The growing reliance on Category II AIFs highlights their role in reshaping the sector. These investment vehicles channel significant capital into the industry while partnering with reputed developers, ensuring strategic asset selection, prime location analysis, and timely financial closure. This comprehensive approach facilitates project completion and delivery, driving higher, secured returns for investors. AIFs are meeting the increasing demand for housing and urban infrastructure, making real estate a preferred asset class for institutional investors.”

Anarock’s data reveals that more than 1.36 million housing units have been launched across the top seven cities between 2021 and September 2024. During the same period, around 1.44 million units were sold, contributing to a 10% decline in unsold inventory despite the high supply rate. This trend highlights the sector’s growing appeal to institutional investors.

The steady increase in AIF commitments, with both domestic and foreign investors contributing, is expected to continue driving the growth of India’s real estate sector. As developers tap into these funding resources to meet the rising demand for housing and infrastructure, the sector is set to maintain its dominant position in the investment landscape.

With innovative funding mechanisms like AIFs leading the charge, the real estate sector is poised to remain a cornerstone of India’s economic growth.

Also Read: Central Suburbs: Mumbai’s Key Hotspot for Real Estate Investments

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