Foreign Investors Are Driving Indian Real Estate To Record Highs, Says JLL

Investments in the Indian real estate sector stand at a record $4.8 billion across 40 deals in just the first half of 2024, with foreign investors leading inflows, according to Jones Lang LaSalle IP Inc. This is the highest investor interest in 18 years.

Investment volumes in the first six months of the year have already reached 81% of the total investments made last year, which was at $5.8 billion, it said in its research.

This period also witnessed twice the number of deals compared to the same period last year, with an average deal size of $113 million.

The Indian economy is still resilient and has a promising future for the real estate industry. The country's success story is main driver for this surge in interest, JLL said.

"The private equity investment outlook remains strong, with a diversification of interest across residential, office, warehousing, and other sectors," the report said.

FII's lead the majority in Indian investments with $3.1 billion invested, or 65% of all investments in the first six months of 2024.

Domestic investors made up 37% of all investments in 2023, up from an average of 19% during the preceding five years. With domestic investors accounting for 35% of the market, this trend looks to be continuing in the first half of 2024.

Notably, domestic investors have shown a greater inclination towards residential properties, while foreign investors continued to favour the office and warehousing sector, the report showed.

"There has been remarkable 62% increase in FIIs, compared to the first half of 2023, demonstrating the unwavering confidence of investors in the growth potential of the Indian real estate market," said Dr Samantak Das, chief economist and head of research and REIS, India, JLL. 

The residential sector in India saw a record-breaking investment of $1.6 billion in the last six months, driven by regulatory reforms and improved transparency. The sector primarily invested in debt, with 68% of deals structured. As the market matures, more investment is expected in emerging sectors, like data centres, student housing and healthcare.

The office sector experienced a decline in first half of 2024, while the warehousing sector led, with 34% of investments. However, it's important to note that the warehousing sector's investment surge was primarily driven by a single deal which accounted for over 92% of the total transaction volume in the warehousing sector in first half of 2024.