Institutional Investments in Indian Real Estate Soar to USD 8.5 Billion in 2025

In 2025, institutional investments in the Indian real estate sector surged to a record high of USD 8.5 billion, marking a 29% year-on-year growth, as reported by Colliers India. This significant increase comes at a time when the global economy is showing signs of recovery, with trade normalizing despite ongoing tariff negotiations. India's strong growth prospects and expanding investment horizons continue to solidify its position as a major destination for global capital across various sectors, including real estate.

Domestic institutional capital emerged as the primary driver of real estate investments in 2025, with inflows more than doubling year-on-year to USD 4.8 billion, accounting for 57% of the total investment volume during the year. This strong growth in domestic investor participation underscores the rising confidence among Indian institutional investors, supported by improving asset quality, stable returns, and greater market transparency. While foreign capital deployment in 2025 moderated by 16% YoY to USD 3.7 billion, cross-border investments showed signs of recovery in the final quarter, indicating a gradual improvement in global investor sentiment.

Private equity investments in Indian real estate reached a new high in 2025, totaling USD 8.5 billion, supported by record capital deployment in the last quarter of the year. Q4 2025 alone witnessed investments of USD 4.2 billion, the highest ever in any quarter, indicating prospective tailwinds in the sector. During the year, office assets continued to attract the bulk of the investments, accounting for 54% of the annual inflows, followed by residential and industrial & warehousing assets. Looking ahead, institutional investments are expected to strengthen further, supported by expanding domestic capital, improving global risk appetite, and India’s strong economic fundamentals. Core income-generating assets, particularly offices, industrial & logistic parks, and residential segments, will remain priority areas for investors in 2026.

The institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign-funded NBFCs, listed REITs, and sovereign wealth funds. The data has been compiled from available information in the public domain.

The Indian office market witnessed record investments, attracting USD 4.5 billion in 2025, almost twice the levels in 2024, supported by rising participation from both domestic and foreign investors. Notably, the final quarter alone accounted for nearly two-thirds of annual capital deployment and coincided with strong Grade A space uptake across the country's major office markets.

Mr. Lalit Parihar, Managing Director of Aaiji Group, a Dholera-based real estate firm, stated, “Rising institutional inflows into India’s real estate reflect a structural shift in the market. As policy reforms, formalization, and steady income-generating assets reduce risk, institutions are increasingly allocating capital at scale - with domestic institutional investors positioning themselves as a stable, long-term driver of real estate growth alongside global investors. The growing geographical diversification of these investments reinforces the market's depth and stability, and provides opportunities for more players to enter these geographies.”

The residential segment followed the office segment with USD 1.6 billion of inflows during 2025, registering a 36% year-on-year growth and accounting for an 18% share in total investments. Capital deployment in the segment continues to be supported by strong long-term demand fundamentals, including favorable demographics, rising income levels, and increased developer expansion into Tier II cities through joint-venture platforms, attracting both domestic and foreign investors.

Meanwhile, mixed-use, retail, and alternative assets also witnessed significant traction, cumulatively totaling about USD 1.5 billion and accounting for nearly 17% of total investments in 2025. Investor appetite in these segments continues to be driven by portfolio diversification and growing focus on assets powered by end-user demand, such as data centers, co-living, second homes, etc.

Vimal Nadar, National Director & Head of Research at Colliers India, noted, “Indian office market has scaled new highs in 2025, attracting a record USD 4.5 billion in institutional investments. Interestingly, alongside this surge, the year also marked the listing of the fourth office-focused REIT and notable acquisitions by older REITs, marked by superior tenant quality, higher occupancy levels, and strong rental growth. Investment traction is supported by strong operational performance and consecutive record-breaking Grade A space uptake in the last 3-4 years. Looking ahead, with over 370 million sq ft of existing office stock having the potential to be included in future REITs, we anticipate a greater degree of institutionalization and consolidation supported by cross-border capital flows over the next few years.”

Bengaluru and Mumbai together drove nearly half of the total real estate investments in 2025, with inflows of around USD 2.2 billion and USD 1.8 billion, respectively. Office assets drove close to three-fourths of the investment activity in these cities. Five out of seven major Indian cities saw a year-on-year rise in capital inflows in 2025. Meanwhile, of the USD 2.3 billion multi-city investments during 2025, over 40% were in residential assets, reflecting growing investor interest in early-stage residential projects and expansion in newer residential markets, including emerging Tier II/III cities.

Mr. Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate focused Alternative Investment Fund (AIF), said, “India’s real estate, across all segments, is seeing a surge in institutional inflows as the market matures, transparency deepens, and returns become more predictable. With stronger regulations, rising domestic capital pools, and growing confidence in long-term fundamentals, domestic investors are stepping up as a key force - anchoring the sector with patient capital and reinforcing its shift from speculative to institutional-grade investment.”

The Indian real estate industry received a boost from institutional investments in 2025, and the trend is set to increase. The office space witnessed the major outflow of investments, while residential, industrial, and mixed-used properties also received significant attention. Major cities such as Bengaluru and Mumbai led the way in investments. The rising institutionalization and healthy demand for real estate properties indicate that the positive trend is likely to continue in the years to come, with core income-generating properties being a priority for investors.