MUMBAI/DUBAI: Amidst the UAE’s booming real estate market, private equity (PE) funds specialising in real estate investments are increasingly turning their attention to India as a promising opportunity.
In 2024, the United Arab Emirates (UAE) accounted for 42 per cent of private equity (PE) investments in India’s real estate sector, contributing approximately $1.7 billion (about Rs14,450 crore).
This substantial investment comes at a time when the UAE’s own real estate market is experiencing significant growth.
Mumbai has proved itself to be the most favoured destination with 50 per cent share in the total PE investments in Indian real estate.
Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “India has seen a rise in investments, particularly over the past decade, driven by economic stability and consistent growth.”
The UAE’s real estate sector has demonstrated robust performance in 2024. Dubai’s residential market, for instance, has reached new heights with record transaction volumes in the third quarter, driving further price growth.
Additionally, the market is projected to grow at a compound annual growth rate (CAGR) of 2.25 per cent between 2024 and 2029, resulting in a market volume of approximately $750 billion by 2029, according to professional projections.
Market saturation concerns?
“Despite this spectacular growth in the UAE’s real estate market, there are emerging concerns about a potential market saturation looming large for some time now, particularly in the luxury segment,” said real estate broker based in Dubai while talking to businessbenchmark.news .
The anticipated addition of 25,000 new homes in Dubai by the end of 2024 has raised questions about oversupply.
Furthermore, there were reports that while the market has shown resilience, factors such as economic uncertainty, elevated interest rates, and regional conflicts have tested its stability.
Diversification strategies
Given these dynamics, UAE investors may be seeking to diversify their portfolios by exploring opportunities in international markets like India.
India’s real estate sector offers attractive prospects due to its expanding economy, favorable demographics, and supportive government policies.
The significant PE investments from the UAE into Indian real estate could be indicative of a strategic move to mitigate risks associated with potential oversaturation in the domestic market and to capitalise on growth opportunities abroad.
While the UAE’s real estate market continues to flourish, concerns about market saturation and external economic factors may be influencing investors to look beyond domestic opportunities.
