Residential segment contributed 63% of total realty investment in Q1 2024, says report

The residential market in Q1 2024 saw a double inflow of investment as the average quarterly amount during the previous eight quarters.

At Rs 5,787.2 crore, investment in residential property accounted for 63 percent of total real estate investment in the first quarter of calendar year 2024, data from consultancy Cushman & Wakefield on May 1 showed.

This was twice as much as the average quarterly amount reported in the previous eight quarters.

Additionally, nearly 48 percent of the money put into the residential sector went to projects in the first phase of construction in the top eight cities, indicating a stronger desire from investors, a consistent increase in the capital values of residential properties across cities and a growing proportion of high-end luxury launches, according to the report.

The total investment in the quarter across segments of the real estate sector stood at Rs 9185.2 crore. While nothing to sneeze at, it was, however, 39 percent lower than the previous quarter’s volume. The data further revealed that domestic investors contributed 57 percent of total quarterly investments. Foreign investors and collaborative (or mixed) deals comprised the remaining 43 percent inflow in Q1 2024.

Bengaluru led the investment inflow

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Souptik Datta

Sub Editor|Moneycontrol

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Among the top eight markets, Bengaluru recorded the highest total investment inflow with a share of 25.6 percent of total investments in the quarter. The bulk of this money went into the office sector.

Pune secured the second position in investment volume, claiming a 14 percent share.

The top eight cities include Bengaluru, Hyderabad, Chennai, Mumbai, Delhi-NCR, Kolkata, Pune, and Ahmedabad.

Equity investments’ share in total inflows stood at 58 percent in the quarter, the lowest share in over eight quarters, largely driven by the high interest rate environment and geopolitical uncertainties.

Equity investments in the context of real estate includes holdings in real estate assets in the primary market for returns realised as a share of the property's rental income.

On the other hand, debt investments surged to double the quarterly average level of the last eight quarters, and almost all of that was directed towards the residential sector.

Debt investment refers to an investor lending money to a company with the expectation that the borrower will pay back the investment with interest.

"Office sector continued to be the preferred sector among equity investors, accounting for 43 percent, closely trailed by residential investments at 38 percent," the report said.

Early-stage deals, despite showing a slowdown from the previous quarter, remained in line with the average inflows over the past eight quarters.

Additionally, the quarter recorded corporate transaction volumes of Rs 1,278 crore, a 65 percent jump on an annualised basis. Mumbai continued to drive transaction value with a 57 percent total share followed by Pune at 33 percent share.

Upcoming quarters to see major fundraises

The report said that the first quarter saw moderate fundraising activity totalling Rs 4,701.1 crore, predominantly driven by the residential segment which comprised 93 percent of the total.

Of the plans in the pipeline, the report said that Embassy REIT, the real estate investment trust that focuses on the Bengaluru-headquartered developer's office and commercial property segment, plans to raise Rs 3,340 crore, earmarked for strategic land acquisitions in Chennai. Fundraising activity is expected to pick up in upcoming quarters given the steady real estate activity witnessed.

Going forward, Blackstone Group, which exited Embassy REIT in December 2023, alongside Panchshil Realty and Salarpuria Sattva Group, is poised to unveil a new REIT in FY25, as Moneycontrol reported. The new entity will have "a projected size of approximately 40 million sq ft, thereby potentially making it the second-largest commercial REIT in South Asia", the report said.