According to Knight Frank India’s latest report, India’s real estate sector witnessed a surge in private equity (PE) investments in 2024, reaching $4.2 billion—a 32% year-on-year growth. The warehousing sector emerged as the star performer, attracting 45% of the total investments, followed by the residential sector at 28% and the office sector at 26%.

The warehousing segment recorded an impressive 136% growth, with investments soaring to $1.9 billion from $684 million in 2023. Mumbai dominated as the preferred destination, receiving 74% of warehousing investments, amounting to $1.54 billion. Chennai and Pune also contributed, attracting $288 million and $52 million, respectively. “The rise in e-commerce and third-party logistics has propelled warehousing to be the top recipient of investments,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

Residential Sector Sees Unprecedented Growth

The residential sector saw PE investments more than double, growing 104% to $1.2 billion in 2024, reflecting increased confidence in end-user demand. Domestic PE investors played a key role in this growth, accounting for a significant portion of the capital flow. “India’s real estate market continues to attract global and domestic investors due to its consistent growth and strong fundamentals,” said Harry Chaplin-Rogers, Director of International Capital Markets – India, Knight Frank.

Mumbai led overall PE investments with $2 billion, followed by Bengaluru with $833 million. In Bengaluru, 52% of investments went to the office sector, while 48% targeted residential projects. Chennai and Pune also contributed to the residential investment tally, showcasing broad interest across cities.

Office Sector Faces Challenges but Remains Resilient

The office sector garnered $1.1 billion in investments, with 82% directed toward ready assets and 18% toward under-construction projects. However, the segment saw a 38% decline year-on-year due to limited investment-grade supply. Bengaluru and Hyderabad emerged as key hubs, attracting significant interest from investors due to strong economic growth and robust demand for office spaces.

Despite the dip, demand for Grade A office spaces in prime locations remains strong, particularly from Global Capability Centers (GCCs) and other corporate occupiers. “The return to workplaces, increasing absorption rates, and strengthening rental values continue to support the office sector,” Baijal noted.

Shifting Investor Dynamics

Foreign investors from the UAE and Singapore were key contributors to the PE inflow. The UAE led with $1.7 billion (42%), while Indian investors followed closely, deploying $1.3 billion (32%). Institutions from Singapore accounted for $634 million, highlighting India’s growing appeal as a global investment destination.

Outlook for 2025

The Indian real estate market is poised for sustained growth, driven by economic stability, urbanisation, and government policies. The warehousing sector is expected to remain dominant, bolstered by demand from e-commerce and logistics industries. The residential sector’s robust growth will likely continue, supported by increased domestic PE activity.

While the office sector faces supply constraints, demand for premium spaces in strategic locations ensures its resilience. With domestic and foreign investors showing strong interest, India’s real estate market is set to deliver another promising year, solidifying its position as a preferred investment hub.