The Indian real estate sector continues to show its resilience in the face of global economic challenges. Institutional investments surged to USD 1.7 billion in the second quarter of 2025, marking a 29% increase compared to the previous quarter. This uptick highlights investor confidence, driven largely by domestic capital, which now accounts for a significant portion of the total inflows. In this article, we will dive into the trends, key players, and segments driving this robust growth in India’s real estate market.
Key Highlights of Institutional Investments in Indian Real Estate (H1 2025)
- Total Institutional Investments: USD 3.0 billion (a 15% decline YoY)
- Key Cities Driving Investments:
- Mumbai: 22% of the total investment share, led by office assets
- Bengaluru: USD 0.5 billion, with office and residential assets making up 57% of investments
- Kolkata: Retail investments made up 13% of the city’s total inflows
- Domestic vs. Foreign Investments: Domestic capital surged by 53%, now accounting for 48% of total investments
- Sectoral Investment Trends:
- Residential assets: USD 0.8 billion, driving 27% of the inflows
- Office assets: USD 0.7 billion, accounting for 24% of the inflows
- Mixed-use assets: 20% increase in share, up from 7% in H1 2024
Investment Growth and Key Segments:
Rise of Domestic Capital
One of the most significant developments in India’s real estate investment landscape is the surge in domestic capital. In H1 2025, domestic investments reached USD 1.4 billion, accounting for nearly 48% of total inflows. This marks a major shift in the capital investment landscape, with Indian institutional investors playing a larger role in the market. Badal Yagnik, CEO of Colliers India, emphasized this shift:
“Domestic capital has emerged as a key driver in India’s real estate investments. Their growing dominance has helped cushion the impact of global uncertainties and propelled total investments to USD 3.0 billion.”
Foreign Capital Dynamics
Although foreign investments saw a significant decline of 39% YoY, dropping to USD 1.6 billion, they still accounted for over half of the total investments in India. Global investors, though cautious, are showing interest in mixed-use and retail assets. These sectors now comprise 55% of foreign institutional investments.
Sectoral Breakdown of Investments
- Residential Assets: Attracting USD 0.8 billion, residential real estate continues to be a favorite among investors, reflecting the ongoing demand for housing across major cities.
- Office Assets: With USD 0.7 billion in investments, office spaces remain a core asset class, driven by demand in cities like Mumbai and Bengaluru.
- Mixed-use Assets: These assets saw a notable rise in investment share, contributing to over 20% of total inflows in H1 2025, up from just 7% in 2024.
Retail and Alternative Assets
The retail sector experienced a significant boost, especially in Kolkata, which saw a major surge in large-scale retail deals. Investments in retail assets reached USD 0.5 billion, signaling a recovery and growing investor interest in this segment. Alternative assets also saw a noticeable rise, further diversifying the investment landscape.
Summary Table:
| Key Metric | H1 2025 | YoY Change |
|---|---|---|
| Total Institutional Investments | USD 3.0 billion | -15% |
| Domestic Capital Investments | USD 1.4 billion | +53% |
| Foreign Capital Investments | USD 1.6 billion | -39% |
| Mumbai Investment Share | 22% | N/A |
| Bengaluru Investment Share | 17% | N/A |
| Kolkata Investment Share | 13% | N/A |
| Residential Assets Investment | USD 0.8 billion | N/A |
| Office Assets Investment | USD 0.7 billion | N/A |
| Mixed-use Assets Investment | 20% of total | +13% YoY |
Quotes from Industry Leaders:
- Badal Yagnik, CEO of Colliers India:
“The growing dominance of domestic capital in India’s real estate sector marks a major shift in the investment landscape, helping sustain market confidence amidst global uncertainties.”
Frequently Asked Questions (FAQs)
- What was the total institutional investment in Indian real estate in H1 2025?
- Total institutional investments in Indian real estate for H1 2025 amounted to USD 3.0 billion, marking a 15% decline compared to H1 2024.
- Which city saw the highest share of investments in H1 2025?
- Mumbai saw the highest share of investments, accounting for 22% of total investments during H1 2025.
- How did domestic capital perform in India’s real estate market?
- Domestic capital saw a significant surge, increasing by 53% to reach USD 1.4 billion, contributing 48% of total investments in H1 2025.
- What sectors saw the most significant investment growth?
- The residential sector saw investments of USD 0.8 billion, and mixed-use assets experienced a notable increase in share, rising from 7% in H1 2024 to over 20% in H1 2025.
- Why did foreign investments decline in 2025?
- Foreign institutional investments declined by 39% YoY due to cautious global investors, influenced by macroeconomic factors like inflation and the flow of credit.