India 3rd favourite spot for global real estate investments: Report

“Foreign investment in India’s industrial and warehousing sector has been gaining momentum recently,” said Piyush Gupta, Managing Director of Capital Markets & Investment Services at Colliers India. “Investor affinity is being driven by rising demand from 3PL (third-party logistics) and e-commerce players, as well as the strengthening of manufacturing capabilities across key industrial corridors.”

Besides India, the Asia Pacific region is home to four of the top ten global cross-border capital sources in 2024, including Singapore, Hong Kong, Japan, and China. Japan and China also feature prominently as global destinations for standing assets, while Australia is another APAC country that made it to the top ten list of destinations for global capital, according to Colliers’ Global Capital Flows Report for the first half of the year.

Growing demand for industrial and office assets in India

India’s industrial and warehousing assets have been a focal point for investment, especially as global investor confidence in these sectors continues to grow. The report noted that investments in industrial assets in India were five times higher in the first half of 2024 compared to the same period last year.

With the rise in demand for Grade A assets and evolving supply-chain models, India’s industrial sector is expected to continue its upward trajectory. “The growing appeal of India as a key destination for industrial investments reinforces long-term confidence in the sector,” Gupta added.

Take a look at the top 10 global cross-border capital destinations for land and development sites:

1. China  

China dominates the list with a huge $36.48 billion in cross-border capital for land and development. Most of this investment stays within the region (Asia Pacific). About 77% of the total global capital targeting such assets went to China in the second quarter of 2024, which is close to its five-year average of 79.8%.

2. Singapore  

Singapore is second on the list with $1.93 billion in investments. Interestingly, all of Singapore’s cross-border investment remains within the region, showing its strong regional focus. It accounted for 4.1% of global investment in Q2 2024, a significant increase from its five-year average of 1.3%.

3. India  

India ranks third with $1.49 billion in cross-border investment for land and development sites. Of this, $272 million came from global sources, while $1.22 billion was regional capital. India captured 3.1% of the total global capital, marking a steady rise compared to its five-year average of 1.3%.

4. United Kingdom  

The UK has $1.32 billion in total cross-border capital, with most ($1.26 billion) coming from global sources. Only a small portion is regional. The UK took 2.8% of the total Q2 2024 capital, higher than its five-year average of 2%.

5. Germany  

Germany saw $1.23 billion in cross-border investment. About $775 million came from global sources, with $456 million from regional. Germany’s share of global capital was 2.6%, slightly above its five-year average of 1.8%.

6. Australia  

Australia had $928 million in total cross-border investment, with a large portion ($666 million) coming from the region. It held 2% of global capital in Q2 2024, which is above its five-year average of 1.7%.

7. Vietnam  

Vietnam received $912 million in cross-border capital, all of which stayed within the region. It attracted 1.9% of global capital in Q2 2024, a significant increase from its five-year average of 0.9%.

8. United States  

The US saw $638 million in cross-border investment, with $372 million from global sources and $266 million from regional. It captured 1.3% of global capital in Q2 2024, in line with its five-year average.

9. Malaysia  

Malaysia received $327 million in cross-border investment, with $135 million from global sources and $192 million regionally. It represented 0.7% of global capital, slightly higher than its five-year average of 0.6%.

10. Japan  

Japan attracted $273 million in cross-border capital, with $148 million from global sources and $125 million regionally. Its share of global capital was 0.6% in Q2 2024, close to its five-year average of 1.5%.

Institutional investors remain interested in Indian real estate

Institutional investor interest in Indian real estate remains strong, with USD 3.5 billion in inflows during the first half of 2024. The report highlights that 70% of these investments were focused on ready assets, although India’s fast-paced infrastructure development will likely present further opportunities in developmental assets in the future.

“Backed by robust domestic demand, healthy GDP growth, and the likely easing of monetary policy in the coming quarters, investments in the Indian real estate sector will remain steady,” said Vimal Nadar, Senior Director and Head of Research at Colliers India. He further noted, “Foreign inflows will continue to dominate institutional investments, with North America and EMEA leading the charge, although we expect increasing interest from investors across the wider APAC region.”

APAC region — a powerhouse of investment opportunities

The Asia Pacific region as a whole remains a powerhouse for economic activity and investment opportunities. Apart from traditional sectors such as residential, commercial, and industrial assets, specialised sectors like data centres and cold storage are also attracting attention from global investors.

“Improving fundamentals are set to create new investment opportunities in the months ahead, with global rate cuts signalling positivity for real estate markets,” said Chris Pilgrim, Colliers’ Managing Director of Global Capital Markets, Asia Pacific.

First Published: Sep 19 2024 | 2:57 PM IST