Year-End 2024: Industrial & Logistics Sector Drives 10% Growth in Private Equity Investments

Data reveals that the Indian real estate sector attracted $4.3 billion (Rs 35,600 crore) in private equity investments during 2024, marking a 10% year-on-year growth. In comparison, PE investments in the sector totaled $3.9 billion (approximately Rs 33,500 crore) in 2023.

The industrial and logistics sector emerged as the leading destination for private equity (PE) inflows in the Indian real estate market during 2024, closely followed by office spaces. Market data indicates that the industrial and logistics segment attracted $2.3 billion (approximately Rs 19,400 crore), accounting for 54% of the total PE investments.

The residential sector also gained traction, driven by increasing demand for premium housing, capturing 15% of the total investments. Alternative sectors such as data centers, life sciences, and mixed-use developments showed promising growth potential, according to Savills India, a global property consulting firm.

Key Figures and Trends

• Total PE investments in the Indian real estate sector reached $4.3 billion (Rs 35,600 crore) in 2024, reflecting a 10% year-on-year growth from $3.9 billion (Rs 33,500 crore) in 2023.
• Foreign institutional investors dominated the landscape, contributing 88% of total PE investment activity, showcasing their pivotal role in driving the sector’s growth.

Despite global challenges, including geopolitical tensions, inflation, and recessionary concerns, private equity maintained momentum, buoyed by India’s robust economic growth. The gradual resurgence in investor confidence highlighted favorable opportunities for both domestic and global institutional investors.

Sectoral Insights

• Industrial and Logistics: This sector led the investment landscape, benefiting from Grade A assets in peripheral cities and improved multi-modal transit infrastructure. These developments are expected to reduce logistics costs, enhance India’s global competitiveness, and support manufacturing growth under schemes like “Make in India” and “PLI.”
• Office Spaces: Although this segment saw a decline in its share, it remained resilient at 29% of total PE investments, aided by the gradual return to workplaces and increased office space absorption.
• Residential: Premium housing demand bolstered the residential sector, making it a key investment avenue.

Expert Opinions

Arvind Nandan, Managing Director of Research & Consulting at Savills India, emphasized the resilience of private equity investments despite global uncertainties, attributing growth to diversification strategies.
“The trends reflect India’s growing role as a supply chain hub, with the industrial and logistics sector taking center stage. Meanwhile, the residential sector is gaining prominence due to rising demand for premium housing,” Nandan stated.

Niranjan Hiranandani, Chairman of NAREDCO, highlighted the importance of foreign institutional investors in sustaining growth. “The robust PE funding underscores the sector’s appeal. The industrial and logistics segment leads due to strategic developments, enhancing India’s manufacturing and export capabilities,” he added.

Notable Investment Transactions

• Abu Dhabi Investment Authority (ADIA) and KKR: A $1.54 billion partnership investment in Reliance Retail Ventures Limited.
• GIC and Xander Investment Management: A $263 million venture with Shapoorji Pallonji Group and Allianz Group.
• Blackstone: A $203 million investment in logistics firm LOGOS India.

Outlook for 2025

Experts predict PE investments in Indian real estate to rise to $4.5–$5 billion in 2025. While the office segment might experience muted growth due to limited investable assets, alternative sectors such as life sciences and data centers are poised for prominence.

Nandan noted that the industrial and logistics sector is expected to remain a key focus as India strengthens its position as a global logistics hub. The growing adoption of REITs and the rise of Alternative Investment Funds (AIFs) will further transform the investment landscape.

Looking ahead, sustained growth in private equity inflows is anticipated, with foreign institutional investors continuing to play a dominant role in shaping the future of the Indian real estate market.