Institutional investments in Indian real estate surged to $0.81 billion in the first quarter of the calendar year 2025 (Q1 CY25), marking a significant 47 per cent year-on-year (Y-o-Y) increase, according to a report released on Tuesday by workplace solutions firm Vestian. This upswing highlights a growing confidence among both domestic and foreign investors in the long-term prospects of India’s real estate sector.
Despite the robust annual growth, investments were down 63 per cent on a quarter-on-quarter (Q-o-Q) basis, pointing to some seasonal or cyclical recalibrations within the investment landscape.
The residential real estate segment led the rally, attracting a substantial $506.1 million in Q1 CY25. This marks a remarkable 125 per cent rise compared to the same period in 2024, underscoring renewed investor interest in housing, driven possibly by strong end-user demand, regulatory reforms, and favourable lending conditions.
Commercial real estate, the traditional stronghold for institutional capital, garnered investments totalling $307.2 million during the quarter—a 33 per cent increase year-on-year. However, its share in the total real estate investment pie slipped slightly from 42 per cent in Q1 CY24 to 38 per cent in Q1 CY25. Analysts attribute this shift to the growing appeal of residential assets amid changing work and lifestyle patterns.
The industrial and warehousing sector, which has seen a boom in recent years due to rising e-commerce activity, did not record any significant institutional investments in Q1 CY25. Nonetheless, the report predicts this segment will rebound later in the year, supported by increased demand from online retail, improved infrastructure, and efforts to reduce logistics costs.
On the source of funds, foreign institutional investors deployed $346.9 million during the quarter—a dramatic 43 per cent rise from the mere $11 million recorded in Q1 CY24. This renewed foreign interest suggests growing trust in India’s economic fundamentals and regulatory environment.
Domestic investors, meanwhile, contributed the lion’s share with $466.4 million—equating to 57 per cent of total inflows. However, this marks a noticeable drop in dominance from the 98 per cent share they held in the first quarter of 2024, indicating a more balanced playing field between global and local capital providers.
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Commenting on the findings, Shrinivas Rao, Chief Executive Officer of Vestian, said: “Investor confidence in India’s growth story remains strong, with both foreign and domestic players showing increased commitment to long-term investments. As investment activity continues to build momentum, we can expect a notable increase in future inflows, further reinforcing India’s position as a dynamic and attractive investment destination.”
Industry observers also noted that while geopolitical uncertainties and interest rate dynamics may affect near-term investment decisions, India’s robust macroeconomic indicators, growing urbanisation, and sustained government push for infrastructure development continue to make the real estate sector a compelling proposition.
Experts believe the resurgence in residential investments—buoyed by shifting consumer preferences post-pandemic, regulatory stability, and the introduction of innovative housing finance solutions—will remain a key theme throughout 2025.
As the year progresses, analysts expect the industrial and logistics segments to pick up pace, particularly with the anticipated rollout of new warehousing policies and continued expansion of e-commerce and manufacturing sectors under the government’s ‘Make in India’ initiative.
The outlook for Indian real estate institutional investments remains positive, with strong momentum in the residential sector, a steady commercial recovery, and growing anticipation for renewed warehousing activity. With increasing foreign participation and improving policy frameworks, India is well-positioned to attract a larger slice of global capital in the months to come.
