Foreign investors dominate investments; co-investments gained traction

New Delhi, January 15, 2025: Foreign investors dominated institutional investments with 54 per cent share in 2024, accounting for $3.7 billion. Despite a sharp reduction in share from 65 per cent in 2023, investments increased by 36 per cent in value terms. Domestic investors followed the same trend as their share reduced to 30 per cent in 2024 from 35 per cent in the previous year, despite an increase of 36 per cent in value terms during the same period.

Interestingly, co-investments gained traction in 2024 as foreign investors relied on the local expertise of domestic investors amid prevailing macroeconomic uncertainty. Co-investment accounted for 16 per cent of the total investments received in 2024, registering a 61-fold increase in value.

As per Vestian Research, institutional investments reached $6.8 billion in 2024, registering an annual increase of 61 per cent. However, investments have been on a downward trajectory since 2020 for four consecutive years and resurrected in 2024 owing to a significant inflow of funds in the industrial and warehousing sector on the back of robust demand for e-commerce and quick commerce across the country.

Despite significant investments in the industrial & warehousing sector, commercial assets continued to dominate with 35 per cent share in 2024. However, the share has reduced drastically from 61 per cent in 2023 owing to the global slowdown in IT-ITeS sector. As demand for GCCs is growing in India, office spaces are expected to witness renewed demand.

On the other hand, the residential sector reported investments worth $2.0 billion, accounting for 30 per cent of the total investments received in 2024. Investments rose by 171 per cent in 2024 over the previous year. Similarly, the industrial and warehousing sector witnessed an annual increase of 203 per cent with a rise in share from 15 per cent in 2023 to 28 per cent in 2024.

Shrinivas Rao, FRICS, CEO, Vestian said, “Despite a slow start, the real estate sector received significant institutional investments in 2024, surpassing pre-pandemic levels. However, 2025 is expected to be challenging due to increasing geopolitical friction, a slowdown in the global economy, and elevated inflation levels. On the other hand, RBI is anticipated to reduce the repo rate in 2025, providing impetus to the real estate sector. Heightened real estate activities due to low mortgage rates may attract investors.”

Factors such as return-to-office policies, government initiatives like the Production Linked Incentive (PLI) scheme, and increased focus on affordable housing are anticipated to drive real estate demand in the coming years. This may attract investors, leading to increased investor participation.