Institutional funding in real estate hits $1 bn-mark in Q1

Institutional investments in Indian real estate hit the $1 billion mark in the first quarter of 2024, signaling a steady start to the year, a report by consultancy Colliers said.

While the investments declined by 40% on a year-on-year basis, the inflows were higher 21% on a sequential basis.

Foreign institutional investments dominated total inflows, forming 55% of the total during the quarter, with the Asia-Pacific region emerging as the top source of funding at 82%.

Domestic investors infused $400 million, or 15% higher than the same period last year, data showed.

At $600 million, the office sector accounted for 57% of the total investment inflows during the quarter.

Hyderabad and Pune attracted the most capital, cornering a combined 52% of the total investments. While Hyderabad attracted most funds in the office space, Pune drew funds in the industrial and logistics space.

Bengaluru attracted a 20% share of the total, with most capital going to the office space, followed by Chennai with a 12% share of the total funds mostly in the mixed-use space.

Delhi-National Capital Region and Mumbai each attracted 3% share of the overall institutional investment pie.

Some of the big-ticket institutional investment deals in the sector during the quarter included Edelweiss Capital’s $178 million investment in MFAR Developers’ office space, followed by Cholamandalam Investment and Finance Co.’s acquisition of a 5-acre DLF Ltd plot in Chennai for $89 million.

Edelweiss Capital had also offered Adarsh Developers about $42 million debt facility in January to complete two projects and repay debt to Oaktree Capital.

Institutional investors continued their preference for completed and pre-leased income-yielding office assets as compared to greenfield developments, Colliers said in its report.

Investments in industrial and warehousing assets maintained momentum with an 18% share of total inflows at $200 million, Colliers said in the report, adding, “As the segment evolves, and micro-fulfilment centers, dark stores and AI-driven supply chain becomes more prevalent, consolidation and institutionalization will pick up pace, further driving global capital in the coming years.”