Real Estate: India ranks 5th in cross border investments in Asia Pacific region with $3 bn funds

A recent report has stated that India is at 5th position in cross-border real estate investments in the APAC region, attracting 9% of the total volume of investment within the region in the first half of 2024. The Knight Frank's report, Asia Pacific Horizon, Look Beyond the Norms, noted that the total cross-border investments in APAC during this period reached $11.5 billion, with India receiving $3 billion from global private equity investors.

In terms of investment in Indian real estate, the office sector accounted for 36% of the total global capital allocation, reflecting the strong appeal of commercial real estate assets. The industrial sector followed closely with 30% of the investment share, while the residential sector received 15%, and retail accounted for 10%.

Top 5 destinations for cross border capital in APAC region
Rank    Country    % Attribution
1    Australia    36%
2    Japan    23%
3    Singapore    11%
4    Greater China    10%
5    India    9%

Source: Knight Frank Research    

“The expected turnaround of global economiesin the second half of the year is likely to encourage more foreign private equity players to take advantage of the country’s robust domestic macros.This influx of investment would boost the performance of Indian real estate and maintain the growth of industry assets,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India. 

Cross-border capital flows are having a significant impact on the commercial real estate market in the Asia-Pacific region, driving the quest for new investment opportunities. It is projected that the expected rate cuts could lead to a more than one-third surge in cross-border investments in the area during the second half of 2024, as opposed to the corresponding period in 2023.

Another report by property consultancy Knight Frank India revealed that Delhi-NCR currently stands as the fifth most expensive office space rental market in the Asia Pacific region. The report also identified Hong Kong SAR as the most expensive office market in the APAC region for the April-June quarter of 2024.

According to the report, Delhi-NCR's prime office market has consistently maintained rental values over the past 6 quarters. With a prime office rent of Rs 340 per sq ft per month, it holds the fifth position in terms of office market expenses in the APAC region.

In contrast, Mumbai's prime office rent was reported at ₹302 per sq ft per month, placing it as the eighth most expensive commercial market in the APAC region. The office leasing market in Mumbai displayed significant growth, with approximately 3 million sq ft leased, representing a remarkable year-on-year increase of 183.1%, as indicated by the report.

Bengaluru, the IT hub of India, has been ranked 18th among the most affordable prime office markets in the Asia-Pacific (APAC) region. According to a recent report, the prime office rent in Bengaluru stands at ₹137 per sq ft per month, displaying a marginal year-on-year increase of about 1.3%.

The report further emphasized that Bengaluru has maintained its position as the top destination among the three major Indian cities, leasing a total of 4.9 million square feet in the second quarter of 2024. With companies actively promoting the return of employees to offices, the transaction volumes in the market have seen a positive impact.

In addition, there has been a significant 50% rise in transaction activities across the key office markets in India, including Delhi NCR, Mumbai, and Bengaluru. Despite this surge, the prime office rental rates have remained stable during the period of April to June 2024, as stated in the report.