Domestic Institutional Investment in Real Estate Surges 53% to $1.4 Billion in H1 2025
Domestic institutional investments in India's real estate sector have seen a significant rise, growing 53% to $1.4 billion in the first half of 2025, according to a report by Colliers. This trend marks a shift towards greater stability and long-term growth in the sector.
Real EstateDomestic InvestmentInstitutional InvestmentColliersIndia Real EstateReal Estate NewsJul 09, 2025
Badal Yagnik, chief executive officer of Colliers India, noted that domestic capital has emerged as a key driver in India’s real estate investments. The share of domestic investments in total investments has risen steadily from 16% in 2021 to 34% in 2024, and in H1 2025, domestic investments accounted for 48% of the total inflows, surging by 53% compared to H1 2024. Over 60% of domestic investments during H1 2025 were directed towards residential and office assets, reflecting sustained confidence in core segments.
Ankur Jalan, CEO of Golden Growth Fund, a category-II real estate-focused Alternative Investment Fund (AIF), highlighted that the exuberance of foreign institutional investors in India’s real estate sector may be waning due to geopolitical tensions and a weakening rupee. However, the rise in domestic institutional investment in the office and housing segments and their growing share will be crucial for the real estate sector’s long-term growth and stability.
The growing share of domestic investments marks an ongoing shift in the capital investment landscape, with Indian institutional investors playing a more prominent role in driving real estate activity across core asset classes. Foreign institutional investments dropped 39% YoY in H1 2025 to $1.6 billion, as global investors remained cautious amidst evolving macroeconomic scenarios, flow of credit, and inflationary pressures. Despite the slowdown, foreign capital still accounted for over half of total inflows, with growing interest in mixed-use and retail assets. Both these segments together comprised about 55% of foreign investments during H1 2025.
Gurugram-based property consulting firm InfraMantra founder Shiwang Suraj emphasized that domestic institutional investors have been playing a key role in India’s real estate landscape. Their increasing share in overall investment is a positive sign, as it helps cushion the sector against global uncertainties. The sector is on an upward growth trajectory, driven by strong demand, rising incomes, and aspirations, as well as infrastructure push.
The residential sector saw a 27% rise in institutional investment at $820 million in H1 2025, while the office sector saw a 22% decline at $703 million. Alternative assets like data centers, life sciences, senior housing, holiday homes, student housing, and schools saw a 658% rise to $159 million. The industrial and warehousing sector saw an 82% decline at $308 million, while mixed-use projects saw a 148% rise at $629 million in H1 2025.
Vijay Harsh Jha, founder and CEO of property brokerage firm VS Realtors, noted that the rise in institutional investment in the residential segment, close to $820 million in the first half, indicates long-term positivity for housing demand in the country. Housing sales in the coming quarters may see an uptick.
Mumbai drove 22% of the total investments during H1 2025, led by select deals in office assets. Bengaluru attracted $0.5 billion in investments during H1 2025, contributing nearly 17% to the total inflows. Office and residential assets together made up 57% of the city’s investment share.
Overall, the surge in domestic institutional investment in India’s real estate sector is a promising sign, indicating a more stable and resilient market. As domestic capital continues to deepen and diversify, it is poised to bring greater stability and long-term confidence to India’s maturing real estate ecosystem.
Frequently Asked Questions
What is the significance of the 53% rise in domestic institutional investment in India's real estate sector?
The 53% rise in domestic institutional investment in India's real estate sector indicates a significant shift towards greater stability and long-term growth in the market. This growth helps cushion the sector against global uncertainties and pushes total investments to the $3.0 billion mark.
How has the share of domestic investments in total real estate investments changed over the years?
The share of domestic investments in total real estate investments has risen steadily from 16% in 2021 to 34% in 2024, and in H1 2025, it accounted for 48% of the total inflows, surging by 53% compared to H1 2024.
Why have foreign institutional investments in India's real estate sector declined?
Foreign institutional investments in India's real estate sector have declined due to global investors remaining cautious amidst evolving macroeconomic scenarios, flow of credit, and inflationary pressures. This caution is also influenced by geopolitical tensions and a weakening rupee.
Which segments of the real estate market are seeing the most growth in institutional investment?
The residential and office segments are seeing the most growth in institutional investment. The residential sector saw a 27% rise in institutional investment at $820 million in H1 2025, while the office sector saw a 22% decline at $703 million. Alternative assets like data centers, life sciences, and senior housing are also seeing significant growth.
What role do domestic institutional investors play in India's real estate market?
Domestic institutional investors are playing a key role in India's real estate market by providing stability and long-term confidence. Their increasing share in overall investment helps cushion the sector against global uncertainties and drives growth in core segments like residential and office assets.
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