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• The Indian real estate sector has seen a significant surge in IPOs in 2024, raising nearly Rs 13,500 crore.
• Housing finance institutions and real estate investment trusts (REITs) have led the traction in IPOs.
• The sector's growth is driven by higher investment in infrastructure, favourable demographics, and higher consumer spending.
• The record-breaking IPO surge in 2024 is a testament to the sector's resilience and potential for future growth.

The Indian real estate sector has experienced a significant surge in funds raised through Initial Public Offerings (IPOs) in 2024. Nearly Rs 13,500 crore has been raised to date, almost double the amount raised in 2023. This robust growth trajectory is indicative of the sector's strength and potential. The year 2024 has already surpassed the total number of IPOs witnessed in 2023, with 123 fresh issues across multiple sectors as of October 20, according to a report by Colliers India.

The bourses have witnessed 21 real estate IPOs since 2021, a significant increase from the 11 listings in the previous four years, from 2017 to 2020. In the post-pandemic era, 21 real estate companies have raised Rs 31,900 crore through IPOs, more than double the funds raised in the preceding four-year period (2017-2020).

Key Players and Trends in Real Estate IPOs

The traction in IPOs in real estate is largely led by housing finance institutions, which attracted 46 per cent of the capital raised during 2021-2024, followed by real estate investment trusts (REITs), at 22 per cent share. Leading real estate developers with a primary focus on residential assets also raised significant funds at Rs 5,600 crore, more than 10 times compared to the preceding four-year period.

Badal Yagnik, Chief Executive Officer, Colliers India, stated that the positive outlook for IPO activity in India is underpinned by higher investment in infrastructure, favourable demographics, and higher consumer spending supported by a conducive regulatory framework. The strong demand across residential, commercial, and retail segments, coupled with the expectation of a probable reduction in lending rates, can further boost real estate activity.

Global Economic Factors and Market Performance

In recent years, real estate IPOs on the stock exchanges have not only grown in volume but have also diversified into newer categories. Leading flex space operators have been expanding their portfolios across cities and expediting their IPO plans. The year-to-date performance of the BSE Realty Index has been impressive, significantly outpacing the Sensex, according to Vimal Nadar, Senior Director and Head of Research, Colliers India.

The Indian real estate sector's performance is also influenced by global economic factors. For instance, US banks with more than US$10 billion in assets saw compensation expenses grow 4.1% year over year, to US$149.6 billion in the first half of 2024. This was mainly due to performance-linked rewards in revenue-generating businesses, such as trading, wealth management, and investment management. At the same time, banks are paying huge sums to attract technology talent in fields such as machine learning and generative AI.

The Indian real estate sector's growth is also reflected in the stock market. The Nifty witnessed an extremely volatile day of trade on Friday, witnessing sharp swings in both directions and closed in the red, merely sustaining above the 25k mark but dropping slightly below the 50 DEMA. Atul Parakh, CEO of Bigul, predicts that the Sensex will reach 90,000-91,000 level by December 2024, driven by robust GDP prospects, increased profitability among corporate players, and anticipated foreign investment inflows.