Real Estate IPOs till October 2024 Touch a Record 123, Raising Rs 135 Billion 

Gurugram / October 29, 2024: India continues to exhibit strong economic growth prospects and business optimism is reflected in the increasing number of Initial Public Offerings (IPOs) in recent years. The traction in the number and volume of public issues lends credibility to an environment of higher corporate earnings, rising participation by retail and institutional investors, and availability of adequate liquidity in the market. With 123 fresh issues (As of October 20, 2024) across multiple sectors, 2024 has already surpassed the total number of IPOs witnessed in 2023. Colliers India said in a statement.

Taking cognizance of numerous factors such as strong housing demand, record-breaking office leasing activity, expansion plans of flex space operators, and an uptick in tourism, sentiments in the real estate sector have been positive. The strong momentum in Indian real estate is echoed in the fact that real estate IPOs have raised nearly Rs 135 billion from the markets in 2024, almost double the amount raised in 2023, the statement added. 

Recent years have witnessed a surge in Initial Public Offerings (IPOs), with real estate companies increasingly tapping the public markets. While the overall IPO landscape has seen fluctuations, real estate IPOs have exhibited a steady upward trend. Notably, 2023 marked a significant year, with 120 IPOs, including seven from the real estate sector, raising a substantial Rs 135.5 billion, the statement added. 

Housing finance companies (HFCs) followed by REITs and real estate developers drive IPOs in the post-pandemic period. Since 2021, the bourses have witnessed 21 real estate IPOs, significantly higher than the 11 listings in the previous four years, during 2017-2020. In the post-pandemic era, 21 real estate companies have raised Rs 319 billion through IPOs, more than double the funds raised in the preceding four-year period (2017-2020). 

Traction in IPOs in real estate is largely led by housing finance institutions, that attracted 46% of the capital raised during 2021-2024, followed by REITs, at 22% share. Leading real estate developers with a primary focus on residential assets too raised significant funds at Rs 56 billion, more than 10X compared to the preceding four-year period.

Driven by strong demand across residential, commercial, and retail segments, IPOs by real estate developers, HFCs, and REITs with underlying assets such as Grade A offices and malls are likely to see continued momentum in the near-mid-term. Furthermore, the expectation of a probable reduction in the lending rates can further boost real estate activity.

“Since 2021, housing finance companies have formed a majority proportion of the IPOs within the domain of real estate at 46%. This was followed by REITs at 22% and real estate developers at 17% who have accessed the primary market. The positive outlook for IPO activity in India is underpinned by higher investment in infrastructure, favorable demographics, and higher consumer spending supported by a conducive regulatory framework.” said Badal Yagnik, Chief Executive Officer, Colliers India.

In recent years, real estate IPOs on the stock exchanges have not only grown in volume but have also diversified into newer categories as well. Leading flex space operators have been expanding their portfolios across cities and expediting their IPO plans. In the near to medium term, several enterprises including flex operators, Small and Medium REIT (SM-REIT), amongst other developers within real estate have already queued up for their IPOs with the Regulator, the statement added. 

“At over 30% gains, the year-to-date performance of the BSE Realty Index has been impressive, significantly outpacing the Sensex. Interestingly, almost one-fifth of the real estate IPOs since 2010 have outperformed even the realty index in 2024. Over 90% of the real estate IPOs listed in the ongoing year have been oversubscribed, an indication of positive markets sentiment and investor confidence in the sector,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

The real estate sector has witnessed a significant surge in Initial Public Offerings (IPOs) in recent years. Between 2021 and 2024, real estate companies have collectively raised a substantial Rs 319.4 billion through IPOs. Housing finance companies (HFCs) emerged as the leading category, attracting 46% of the total funds raised, followed by Real Estate Investment Trusts (REITs) at 22% and real estate developers at 17%. This trend indicates a growing preference among investors for real estate-related assets and a strong belief in the sector’s long-term growth potential.