India Secures $3 Billion in Cross-Border Real Estate Investments in 2024, Ranking Fifth in APAC

In a significant development for the Indian real estate market, the country has secured $3 billion in cross-border real estate investments during the first half of 2024, according to a recent report by Knight Frank. This achievement places India as the fifth-largest recipient of cross-border real estate investments in the Asia-Pacific (APAC) region, attracting 9% of the total investment volume. Australia led the region, garnering a 36% share, followed by Japan with 23%.

The APAC region saw a total of $11 billion in cross-border real estate investments during this period, with India emerging as a key player. The Indian market's appeal to global private equity investors has been particularly noteworthy, reflecting the country's growing prominence in the global real estate landscape.

India's Real Estate Sectors: A Breakdown of Investment

India's commercial real estate sector has been the standout performer, attracting 36% of the total global capital allocated to the country. The strong appeal of office spaces in major cities like Bangalore, Mumbai, and Delhi has driven this growth, as investors continue to recognize the potential for high returns in these urban hubs. The demand for premium office spaces in Bangalore, often referred to as India’s Silicon Valley, has been particularly robust, contributing significantly to the investment influx.

The industrial sector has also attracted substantial interest, accounting for 30% of the total investment share. Cities like Chennai and Pune, known for their thriving industrial corridors, have become focal points for investors seeking to capitalize on India’s manufacturing and logistics boom. The residential sector, while receiving a smaller share at 15%, remains a critical area of interest, particularly in metros like Mumbai and Bangalore, where the demand for high-quality housing continues to rise. Retail, though accounting for just 10% of the investments, has seen growth in cities like Delhi and Hyderabad, where consumer spending and retail infrastructure are on the rise.

Global Economic Turnaround Expected to Boost Future Investments

The expected recovery of global economies in the latter half of 2024 is anticipated to further bolster India’s attractiveness to foreign private equity players. Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasized the country’s strong domestic macroeconomic indicators, which are likely to encourage more foreign investments. With India's GDP growth showing resilience and urbanization continuing at a rapid pace, cities like Bangalore, Mumbai, and Delhi are expected to remain top choices for global investors.

The report highlighted that the APAC region as a whole is poised for a surge in cross-border real estate investments, with a projected increase of one-third in the second half of 2024. This uptick is expected to be driven by the office sector, which is anticipated to attract 30% of these investments. The logistics sector, which has seen substantial growth in cities like Chennai and Pune, is expected to follow closely with 29% of the investment share.

Australia Leads, While China Struggles

Among key gateway markets in the APAC region, Australia is predicted to receive the highest volume of cross-border investments in the second half of 2024. The country is expected to see a 129% increase in investment from the previous year, driven by its stable economy and favorable investment climate. For the entire year, Australia, Japan, and Singapore are projected to be the top three destinations for cross-border real estate investments.

In contrast, China’s real estate market continues to struggle. The ongoing crisis in the Chinese property market has significantly dampened investment flows, with the country receiving only a tenth of the total cross-border investments in the APAC region during the first half of 2024. The Chinese market's challenges underscore the importance of diversification for investors, with many shifting their focus to more stable and growing markets like India.

A Prime Investment Window in APAC

Christine Li, Head of Research at Knight Frank Asia-Pacific, provided a historical perspective, noting that transaction volumes in the region typically normalize within 30 months of a major crisis. With the region currently in the 24th month of a high interest-rate-induced downturn, she suggested that the latter half of 2024 could present a prime investment window for those looking to acquire undervalued assets. This sentiment is particularly relevant for markets like India, where the potential for capital appreciation remains strong, especially in cities like Bangalore and Mumbai, which continue to draw significant investor interest.

As the year progresses, India’s position in the global real estate market is likely to strengthen further. With favorable economic conditions and a diverse range of investment opportunities across its major cities, India is well-positioned to attract even more cross-border investments in the coming months. The robust performance of its office and industrial sectors, in particular, will be key drivers of this growth, cementing India's status as a major player in the APAC real estate landscape.