Foreign Investors Propel Institutional Investment Resurgence in 2024

Foreign investors lead a resurgence in institutional investments in 2024, with a notable 36% increase despite a reduced share. The industrial sector sees significant growth, and co-investments rise, indicating a shift in strategy amidst economic uncertainties. Total investments rebounded 61% from a four-year low.

In 2024, foreign investors continued to dominate the institutional investment landscape, contributing 54 percent of the total USD 3.7 billion inflows, according to a Vestian report. Although their share decreased from 65 percent in 2023, the actual value of their investments saw a substantial 36 percent increase.

Similarly, domestic investors observed a 36 percent growth in their investment value while their share fell to 30 percent from the previous year's 35 percent. A significant contributor to this growth was the rise in co-investments, where foreign and domestic partners collaborate. This strategy has seen a 61-fold increase in value, reflecting foreign investors' growing reliance on local expertise amid global economic uncertainties.

Vestian Research reports a remarkable resurgence in total institutional investments, which rebounded to USD 6.8 billion in 2024, marking a 61 percent increase from the previous year and breaking a four-year decline. The industrial and warehousing sector is a key driver, buoyed by strong demand in e-commerce and quick commerce segments.

Despite the industrial sector's growth, commercial real estate remains the largest segment of institutional inflows in 2024 at 35 percent, down from 61 percent in 2023, due to the global IT-ITeS slowdown. Residential investments have also surged, reaching USD 2 billion and accounting for 30 percent of total investments, a 171 percent increase.

Industrial investments rose dramatically by 203 percent, claiming a 28 percent share of institutional inflows compared to 15 percent in 2023. Despite a slow start, the real estate sector's 2024 investment levels have surpassed pre-pandemic figures. However, challenges loom for 2025 with potential geopolitical tensions, economic slowdown, and inflation concerns. Shrinivas Rao of Vestian anticipates that an expected reduction in the RBI repo rate could benefit the sector.

(With inputs from agencies.)