India

India's booming real estate market attracts USD 3.6 billion in foreign investment

PNT Reporter | Last Updated : 19th Mar, 2024
Synopsis

Global investors are turning to India's thriving real estate market, fuelled by its projected 5.7% GDP growth in 2024 and investor-friendly policies like Real Estate Investment Trusts (REITs). With demand for office, residential, and industrial spaces exceeding 3.6 billion sq. ft., India presents lucrative opportunities. Compared to other Asia Pacific markets, Indian real estate offers attractive pricing, better valuations, and higher yields, attracting a diverse range of investors. Foreign investment surged 20% in 2023, reaching USD 3.6 billion, with growing interest from countries like Singapore and South Korea. With a focus on sustainability, India's real estate sector anticipates continued growth in 2024, offering dynamic investment prospects.

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Global investors are turning their sights to India's booming real estate market. Colliers, a leading investment management firm, predicts a dynamic year for the Asia Pacific region, with India emerging as a particularly attractive destination.

India boasts a projected GDP growth rate of 5.7% in 2024, making it one of the fastest-growing economies globally. This economic resilience is a major draw for investors seeking stable investment returns. The government has also implemented policies that create a welcoming environment for foreign investors. Initiatives like Real Estate Investment Trusts (REITs) offer alternative exit strategies, further enhancing the attractiveness of the market.

India is experiencing rapid urbanization, with Colliers estimating the demand for office, residential, and industrial spaces exceeding a staggering 3.6 billion sq. ft. This growth presents a golden opportunity for investors to capitalise on the rising need for quality real estate across various sectors.

Compared to other markets in the Asia Pacific region, Indian real estate offers investors a compelling combination of attractive pricing, better valuations, and higher yields. This makes it a cost-effective option for those seeking strong returns. Additionally, investor focus is shifting beyond traditional office spaces. While office assets remain popular, attracting a massive 90% of foreign investment in 2023, there's a growing interest in alternative asset classes like residential, industrial, and warehousing sectors. This diversification offers a wider range of opportunities for investors with varying risk appetites.

Foreign investments in Indian real estate are on the rise, with a significant 20% year-over-year increase recorded in 2023, reaching USD 3.6 billion. This trend is expected to continue in 2024, with new funds entering the market. Leading economies like the US and Canada are major sources of investment, but there's a growing interest from Asia Pacific (APAC) countries like Singapore and South Korea. Investment inflows from the APAC region surged a noteworthy 57% year-over-year to USD 1.8 billion in 2023, with 70% targeting office assets. This broader international participation demonstrates a surge in global confidence in India's real estate market.

As environmental, social, and governance (ESG) standards become increasingly important, India's real estate sector is expected to adapt and align with these global practices. This focus on sustainability will further attract responsible investors seeking to align their investments with environmentally and socially conscious practices.

Looking ahead, the Indian real estate market is poised for continued growth in 2024. Driven by a strong economy, a positive business environment, and robust demand across various property segments, investors can expect a dynamic year with increased activity, narrowing gaps between buyers and sellers, and a wider range of opportunities to invest across diverse asset classes. Colliers report that global investors have consistently infused an average of USD 4 billion annually in the last five years, showcasing their continued commitment and confidence toward the Indian real estate sector.

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