Surge in Institutional Investments in Indian Real Estate During Q2 2025

In the second quarter of 2025, the Indian real estate sector experienced a remarkable surge in institutional investments, totaling $1.80 billion. This growth was primarily driven by foreign investors from the US, Japan, and Hong Kong, who focused heavily on commercial properties. The report highlights a shift towards co-investments as investors adopt a more cautious approach amid global uncertainties. Despite a year-on-year decline in overall inflows, the quarterly growth reflects renewed confidence in the market, supported by strong economic fundamentals. With predictions of over 6% economic growth for FY 2026 and a recent repo rate cut, the outlook for the sector remains positive.

By Narendra Chaudhary Jul 7, 2025, 12:59 IST

Significant Growth in Real Estate Investments

New Delhi, July 7: The Indian real estate market attracted institutional investments totaling $1.80 billion in the second quarter of 2025 (April-June). Notably, investors from the United States, Japan, and Hong Kong accounted for approximately 89% of these foreign investments, as reported on Monday.

This quarter saw a remarkable increase in investments, more than doubling with a 122% rise compared to the previous quarter, according to the Vestian report.

Foreign investments were predominant during this period, with around 69% of the funds from the US, Japan, and Hong Kong directed towards commercial properties. In contrast, residential real estate received a mere 11% of the total investments, while the remainder was allocated to various other property types.

Co-investments also saw a significant increase, rising to 15% from 8%, reflecting a slight 2% growth in value.

The trend of shifting from direct investments to co-investments among foreign investors indicates a more cautious strategy, aimed at minimizing risks amid geopolitical tensions and economic uncertainties, as highlighted in the report.

"The second quarter of 2025 witnessed a robust recovery in institutional investments, primarily driven by a notable rebound in commercial real estate activities compared to the previous quarter. Although overall inflows are lower year-on-year, the substantial quarterly growth signifies renewed investor confidence, bolstered by strong macroeconomic fundamentals and inherent demand," stated Shrinivas Rao, FRICS, CEO of Vestian.

This upward trend is anticipated to persist, with several rating agencies forecasting economic growth exceeding 6% for FY 2026.

Additionally, the recent cut in the repo rate is expected to enhance positive sentiment by lowering borrowing costs and facilitating better credit access for the real estate sector, Rao added.

Domestic investors contributed 19% of the total investments in Q2 2025, a decrease from 21% during the same period last year. In terms of value, domestic investments amounted to $336 million.