Image showing an aerial view of a construction site. For representational purposes.
Credit: iStock Photo
Bengaluru: India ranks third in the list of global cross-border capital destinations for land and development sites, according to a report released on Thursday by professional services and investment management company Colliers. Between June 2023 and June 2024, the country saw total cross-border investments worth $1.5 billion.
China ranked first globally with the country’s incoming real estate investment at almost $36.5 billion, followed by Singapore at $1.9 billion in the same time period.
Overall, the Asia Pacific region (APAC) dominated the market with seven of the top ten markets as a key location for land and development sites.
Foreign investments drove 73 per cent of the total investment inflows in India between January to June 2024 (H1 2024).
The Indian real estate sector saw $3.5 billion of institutional investment in H1 2024. Nearly 70 per cent of the total foreign inflows in India’s real estate sector were directed towards industrial and warehousing assets. Investments in industrial assets were five times compared to the same period last year.
In the second quarter of 2024 (April-June), India’s percentage share of total investments was 3.1 per cent, higher than its five-year average of 1.3 per cent.
While 70 per cent of investments during H1 2024 were focused on ready assets, opportunities are expected to continue in developmental assets over the coming years, according to Colliers.
For China, the percentage share for Q2 is 77 per cent. However, overall in APAC, transaction volumes have declined throughout 2024. Q2 saw volumes drop 29 per cent below 2023 levels. This is primarily due to a 30 per cent decline in land and development site transactions across APAC, with sales in China falling 40 per cent year-on-year.
The office sector was the most sought after in terms of investment activity in APAC during this period, followed by the industrial sector.
In terms of global cross-border capital sources, APAC was home to four of the top ten as of June 2024 (calculated from June 2023). These were Singapore, Hong Kong, Japan and China. The United States ranked first globally.
The EMEA region, however, remained the top destination for global capital targeting standing assets, topped by the UK which recorded $20.6 billion in cross-border investments between June 2023 and June 2024. Japan and China were in the top five destinations globally.
"Investor affinity is being driven by rising demand from third-party logistics and e-commerce players and strengthening of manufacturing capabilities across key industrial corridors of the country," said Piyush Gupta, Managing Director, Capital Markets and Investment Services at Colliers India.
“Backed by robust domestic demand, healthy GDP growth and likely easing of monetary policy in the next few quarters, investments in the Indian real estate sector will remain steady. Although North America and EMEA will lead the foreign inflow of funds, we can witness increasing traction from investors in the wider APAC region," added Vimal Nadar, Senior Director and Head of Research, Colliers India.