Year-End 2024: Industrial & Logistics Sector Drives 10% Growth in Private Equity Investments

2024-12-31 02:41:32

Indian Real Estate Secures $4.3 Billion in PE Investments in 2024, Driven by Industrial & Logistics Sector

Private equity (PE) investments in India's real estate sector reached $4.3 billion (Rs 35,600 crore) in 2024, marking a 10% year-on-year increase from $3.9 billion (Rs 33,500 crore) in 2023, according to market data.

Sector-Wise Highlights

1. Industrial and Logistics Lead

   • The industrial and logistics sector attracted $2.3 billion (Rs 19,400 crore), accounting for 54% of total investments.
   • This sector emerged as the top destination for PE inflows, reflecting India’s growing role as a supply chain hub.

2. Residential Sector Gains Momentum

   • Rising demand for premium housing fueled growth in the residential sector, which captured 15% of the total investments.

3. Commercial Office Sector Remains Resilient

   • Despite a decline in its share, the office sector secured 29% of total PE investments, supported by the gradual return to workplaces and higher office space absorption.

4. Emerging Alternative Sectors

   • Data centers, life sciences, and mixed-use developments also gained traction, highlighting a shift toward diversification in real estate investments.

Role of Foreign Institutional Investors

Foreign institutional investors played a significant role, contributing 88% of the total investment activity in 2024. This underscores their continued dominance and confidence in India's real estate market, even amidst global economic uncertainties.

Key Transactions of 2024

• Abu Dhabi Investment Authority (ADIA) & KKR: $1,537 million investment in Reliance Retail Ventures Limited.
• GIC & Xander Investment Management: $263 million venture with Shapoorji Pallonji Group and Allianz Group.
• Blackstone: $203 million investment in logistics firm LOGOS India.

Expert Insights

• Arvind Nandan, Savills India:
  "The industrial and logistics sector has positioned itself as a focal point for PE inflows, aligning with India’s potential as a global logistics hub. The rise in premium housing demand also marks the residential sector as a key investment avenue."

• Niranjan Hiranandani, NAREDCO:
  "The industrial and logistics sector’s growth is driven by Grade A assets in metro peripheries and enhanced connectivity through multi-modal transit infrastructure, reducing logistics costs and boosting manufacturing aligned with the 'PLI' and 'Make in India' initiatives."

Future Outlook

Experts predict that PE investments in Indian real estate will grow to $4.5–$5 billion in 2025. While the office sector may face muted investments due to limited investible assets, alternative sectors such as life sciences and data centers are expected to gain prominence.

The growing adoption of Real Estate Investment Trusts (REITs) and the rise of Alternative Investment Funds (AIFs) are likely to reshape the investment landscape, ensuring sustained growth in the sector.