PE investments in real estate surge 32% YoY to US$ 4.2 bn in 2024; Warehousing leads with 45% share: Knight Frank India

PE investments in real estate surge 32% YoY to US$ 4.2 bn in 2024; Warehousing leads with 45% share: Knight Frank India

• PE investments in residential grows by 104% YoY, highest since 2021
• Mumbai most favoured destination for PE investment, Bengaluru and NCR follow
• 42% of PE Investments received from UAE, domestic investment at 32%
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Mumbai, December 19, 2024: Private equity (PE) investments in Indian real estate reached US$ 4.2 billion (bn) in calendar year (CY) 2024, marking a 32% year-on-year (YoY) growth. The warehousing sector led the way, accounting for 45% of total investments, followed by the residential sector at 28% and the office sector at 26%. Knight Frank India, the leading international property consultancy, has released its latest report, Trends in Private Equity Investment in India 2024.

Notably, in 2024, PE investments more than doubled in the residential sector which saw a remarkable 104% increase in PE investments, amounting to US$ 1.2 bn in 2024, demonstrating investor confidence in this segment which has been noting a consistent rise in end-user demand.The report observed a significant change in investor focus and sectoral preferences, with the warehousing sector surpassing the office sector, which had held the highest share of PE investments since 2017, underscoring the growing importance of warehousing as a key driver of private equity inflows into the Indian real estate market.

Mumbai is the most favoured destination with 50% of total PE investments in the city, driven by large volumes of investment in warehousing in the city, PE investment landscape in 2024, attracting US$2 Bn in 2024.  The warehousing sector dominated with 74% of the total PE investments in Mumbai, amounting to US$ 1,537 mn while the residential sector attracted US$406 mn, making up 20% of the total PE investment in the city. Bengaluru received total PE investments US$ 833 mn in 2024. Around 52% of these investments, amounting to US$ 430 mn, was towards the office sector, while the remaining 48% or US$ 403 mn, was invested in the residential sector.

PE investments received across major Indian cities in 2024
City	Residential	Office	Warehouse	Total
Mumbai	406	124	1537	2068
Bangalore	403	430		833
NCR	203	263		466
Hyderabad	92	265		357
Pune	46	16	52	113
Chennai	28		288	316
Total	1,177	1,098	1,877	4,153

Source: Knight Frank Research, Venture Intelligence

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, "India has seen a rise in investments, particularly over the past decade, driven by economic stability and consistent growth. The warehousing sector, propelled by the rise in e-commerce and third-party logistics, emerged as the top recipient of investments, followed by the residential sector, which benefited from growing consumer demand. While the office segment saw a dip, Indian commercial real estate remains resilient, supported by factors such as the return to workplaces, increasing office absorption, and strengthening rental values. Looking ahead, an anticipated easing of economic conditions in the Western world is likely to revive global investment flows. Coupled with India's robust growth trajectory, this is expected to drive greater investment activity from international funds."

Country of Origin of PE

Of the total PE investments made in 2024, the capital flow has been the maximum from UAE estimated at US$ 1.7 Bn, making up 42% of investments in India, followed by Indian investors who deployed investments US$ 1.3 Bn in 2024 forming 32% of the share of capital invested. Institutions and funds based in Singapore invested an estimated US$ 633.7 mn in Private Equity in India.

Harry Chaplin-Rogers, Director of International Capital Markets – India, Knight Frank said, "India is fast becoming a destination of choice for global investors that are attracted by consistent growth and ambitious economic plans of the country. This year, specifically, we have seen interest from institutions from the Middle East and Asia that are looking for safe investment havens in markets that are largely familiar to them. We expect this trend to continue in the new year as the Indian economy and the real estate sector are expected to grow further."

Trends in PE investments: Warehousing

 

Investment in the warehousing segment showed a significant upward trajectory in CY 2024, reaching US$ 1.9 bn, a remarkable 136% increase YoY.  Geographically, Mumbai and Chennai were the primary beneficiaries, attracting US$ 1,537 mn and US$ 288 mn respectively. Pune attracted US$ 52 mn worth of investments in this sector in 2024.

City wise PE investments in warehouse sector

City	Investment (US$ mn)
Mumbai	1537
Chennai	288
Pune	52

Source: Knight Frank Research, Venture Intelligence 

The warehousing sector emerged as the leader receiving highest investment in 2024, rising sharply to US$ 1.9 bn, from US$ 684 mn in 2023. PE investors are actively engaged in the warehousing market, particularly targeting subsectors such as e-commerce, logistics, and third-party logistics (3PL) facilities. Warehousing sector is experiencing robust growth due to the burgeoning e-commerce industry and an increasing focus of the companies on supply chain optimisation. 

Warehousing Sector led the investment space, received investments worth US$ 1,877 mn in 2024

The inherent demand for warehousing is due to growing consumerism and manufacturing coupled with supportive government policies and growing demand from various industries, making it a compelling proposition for PE investors.  The warehousing sector is poised to play a pivotal role in shaping the future of Indian real estate.

 

Trends in PE investments:  Residential

 

The residential sector attracted an investment of US$ 1.2 bn in 2024, marking a staggering 104% increase YoY. Geographically, investments in the residential sector were spread across India, with Mumbai leading with US$ 406 mn, followed by Bengaluru with US$ 403 mn, and Delhi-NCR with US$ 202 million. This distribution of investment underscores the nationwide appeal and potential of the residential market.

PE investments received across India in Residential Sector

City	Investment (US$ mn)
Mumbai	406
Bengaluru	403
Delhi-NCR	202
Hyderabad	92
Pune	46
Chennai	28
Total	1,177

Source: Knight Frank Research, Venture Intelligence

Unlike the previous year, PE investors adopted a more diversified approach in 2024, where investments were mainly directed toward under-construction projects. A significant portion of investments were deployed in early-stage positions, reflecting the growing confidence in the sector's future potential.

Investments observed both in under-construction properties and new developments

PE investments received in Residential Sector

 

Trends in PE: investments: Office Assets

 

The office sector attracted US$ 1.1 bn in investments in 2024, with 82% directed towards ready assets and only 18% towards under-construction projects. However, the market saw a 38% YoY decline, primarily due to a shortage of investment-grade office supply. Bengaluru and Hyderabad emerged as key investment hubs, driven by strong economic growth and their prominence in India's office space market, drawing significant PE interest.   

PE investments received across India in Office Sector

City	Investment ($ mn)
Bangalore	430
Hyderabad	265
NCR	263
Mumbai	124
Pune	16
Total	1,098

Source: Knight Frank Research, Venture Intelligence

 

 

Outlook

 

Going by the track record of the past couple of years, the Indian real estate market is poised for robust growth in the coming years. The warehousing sector emerged as a key player in 2024. The residential sector, bolstered by strong demand and increased involvement from domestic PE investors, is a major growth catalyst. These trends are expected to continue, driven by strong economic fundamentals, rapid urbanisation, and favourable government policies.

While the office sector experienced a dip in investments in the year, demand for Grade A office spaces in prime locations remains strong, particularly from Global Capability Centres (GCCs) and India-facing businesses. The rising influence of domestic PE investors, especially in the residential sector, reflects increased confidence in the market and a better understanding of local dynamics. With strong domestic fund activity and the potential for a resurgence of foreign investment, the market outlook is promising.

 

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