Foreign Investment in Indian Real Estate Plummets 68% Year-Over-Year in Q3 2025
Despite a strong overall performance in institutional investments, foreign investment in Indian real estate has seen a dramatic decline, dropping to just 8% of total institutional inflows in Q3 2025, according to a new report by Vestian.
Foreign InvestmentReal EstateIndiaInstitutional InvestmentsEconomic UncertaintyReal Estate NewsOct 28, 2025
The value of foreign investments plummeted to $141 million, marking a staggering 88 percent decline compared to the previous quarter (Q2 2025) and a 68 percent annual decline compared to Q3 2024. This flight of capital occurred even as the sector as a whole attracted $1.76 Billion in Q3 2025, an 83 percent jump year-on-year.
Domestic and co-investments were critical in mitigating the foreign outflow and driving the overall positive figures. The share of India-dedicated investments surged to a significant high of 51 percent ($892.22 million), marking a robust 166 percent quarterly increase and a 115 percent annual increase in value.
Foreign investors who chose to remain in the market favoured collaboration, boosting the share of co-investments (joint funding by foreign and domestic investors) to 41 percent ($726.58 million) from just 15 percent in Q2 2025.
Shrinivas Rao, FRICS, CEO, Vestian, commented on the trend: 'While foreign investors adopt a cautious approach [due to global headwinds], the significant rise in the share of domestic investments and co-investments underscores the growing confidence of domestic investors in India’s growth story.’
Commercial assets remained the favourite for the capital that did flow in, accounting for a massive 79 percent share of total investments, surging to nearly $1.4 billion. This segment registered a strong 104 percent annual growth. In contrast, the residential sector's share dropped to just 11% ($192 million), reflecting a sharp 49 percent quarterly decline. The industrial and warehousing sector, though small at 5 percent share, saw a 168 percent quarterly surge due to growing logistics demand.
Frequently Asked Questions
What is the current state of foreign investment in Indian real estate?
Foreign investment in Indian real estate has significantly declined, dropping to just 8 percent of total institutional inflows in Q3 2025, a 68 percent annual decline compared to Q3 2024.
How did domestic investments and co-investments impact the market?
Domestic investments and co-investments were crucial in mitigating the foreign outflow. India-dedicated investments surged to 51 percent, and co-investments increased to 41 percent of total investments.
Which asset class saw the most investment in Q3 2025?
Commercial assets were the most favoured, accounting for 79 percent of total investments, with a strong 104 percent annual growth.
What was the performance of the residential sector in Q3 2025?
The residential sector's share dropped to just 11 percent ($192 million), reflecting a sharp 49 percent quarterly decline.
What factors are driving the industrial and warehousing sector?
The industrial and warehousing sector, though small at 5 percent share, saw a 168 percent quarterly surge due to growing logistics demand.
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