NTI: In a clear sign of robust growth in India’s real estate sector, 2024 has already seen seven real estate companies going public through Initial Public Offerings (IPOs), raising a substantial ₹13,500 crore, nearly double the amount raised last year. According to data from the Bombay Stock Exchange (BSE), this increase highlights a vibrant market compared to 2023, which recorded five IPOs generating ₹6,900 crore.
The real estate sector’s dynamism reflects broader trends in India’s IPO landscape this year. As of October 20, 2024, the Indian capital market witnessed 123 fresh IPO issues, spanning mainboard and SME segments across various industries. This surpasses the total of 120 IPOs observed in 2023, driven by positive market sentiments.
Real estate, which contributes approximately 7.3% to India’s GDP, saw a notable increase in IPO activity. Since 2021, 21 real estate IPOs have entered the market, a significant rise from the 11 IPOs recorded from 2017-2020. Investment management firm Colliers reports that, in the post-pandemic period, these 21 IPOs raised a remarkable ₹31,900 crore, more than doubling the funds generated in the four years prior.
This surge in IPOs has been particularly driven by housing finance institutions (HFCs), which attracted 46% of the capital raised from 2021 to 2024, followed by Real Estate Investment Trusts (REITs) with a 22% share. Prominent real estate developers, focusing on residential properties, accounted for capital inflows amounting to ₹5,600 crore—more than ten times the amount raised in the preceding four years.
Colliers’ sector outlook projects continued momentum for IPOs among real estate developers, HFCs, and REITs, especially those with Grade A office buildings and shopping malls as their underlying assets. A reduction in lending rates could further boost market activity. HFCs have already recorded a 46% increase in funds raised, reaching ₹14,690 crore, followed by REITs with 22% growth at ₹7,000 crore and real estate developers with a 17% growth at ₹5,550 crore.
Badal Yagnik, CEO of Colliers India, attributes this positive trend in IPO activity to increased investment in infrastructure, favorable demographics, and higher consumer spending within a supportive regulatory environment. “Since 2021, housing finance companies have led the IPO space in real estate with a 46% share, followed by REITs at 22% and real estate developers at 17%,” he notes.
The real estate IPO landscape has also diversified, with new entrants such as flexible office space operators preparing for public offerings. Several small and medium REITs (SM-REITs) have also lined up IPO plans, aiming to leverage the ongoing demand.
Notably, the BSE Realty Index has achieved gains of over 30% this year, outperforming the Sensex. Vimal Nadar, Senior Director and Head of Research at Colliers India, states that more than 90% of the real estate IPOs launched in 2024 have been oversubscribed, underscoring investor confidence in the sector’s growth potential.
As the sector continues to evolve, the real estate IPO wave highlights a promising outlook, fueled by urbanization, demand for residential and commercial spaces, and a favorable investment climate in India.
