Record-Breaking Institutional Investments in Indian Real Estate Reach USD 8.5 Billion in 2025

The Indian real estate sector saw an unprecedented surge in institutional investments, reaching a record high of USD 8.5 billion in 2025, according to Colliers India. This represents a 29% year-on-year growth, reflecting a robust global economy and India's growing prominence as a destination for capital across various economic sectors, including real estate.

Domestic institutional capital played a pivotal role in this growth, with inflows more than doubling year-on-year to USD 4.8 billion, accounting for 57% of the total investment volume. This surge in domestic participation is a testament to the rising confidence among Indian institutional investors, bolstered by improved asset quality, stable returns, and enhanced market transparency. On the other hand, foreign capital deployment, while moderating by 16% year-on-year to USD 3.7 billion, 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, with the fourth quarter alone witnessing investments of USD 4.2 billion, the highest ever in any quarter. Office assets continued to dominate, accounting for 54% of the annual inflows, followed by residential and industrial and warehousing assets. Badal Yagnik, Chief Executive Officer & Managing Director of Colliers India, noted that core income-generating assets, particularly offices, industrial and logistic parks, and residential segments, will remain priority areas for investors in 2026.

The Indian office market experienced a significant boost, attracting USD 4.5 billion in 2025, nearly twice the levels of 2024. The final quarter alone accounted for nearly two-thirds of the annual capital deployment, coinciding with strong Grade A space uptake across major office markets. Mr. Lalit Parihar, Managing Director of Aaiji Group, a Dholera-based real estate firm, highlighted that the rising institutional inflows reflect a structural shift in the market, driven by policy reforms, formalization, and steady income-generating assets.

The residential segment also saw substantial growth, with USD 1.6 billion of inflows, a 36% year-on-year increase, and accounting for 18% of total investments. This growth is 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.

Mixed-use, retail, and alternative assets also gained traction, cumulatively attracting about USD 1.5 billion, or nearly 17% of total investments in 2025. Investor interest in these segments is driven by portfolio diversification and a growing focus on assets powered by end-user demand, such as data centers, co-living, and second homes.

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. Of the total USD 4.0 billion inflows in these cities, office assets accounted for close to three-fourths of the investment activity. Five out of seven major Indian cities saw a year-on-year rise in capital inflows in 2025. Of the USD 2.3 billion multi-city investments, over 40% were in residential assets, reflecting growing investor interest in early-stage residential projects and expansion into 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), emphasized that the Indian real estate market is maturing, with transparency deepening and returns becoming more predictable. Stronger regulations, rising domestic capital pools, and growing confidence in long-term fundamentals are anchoring the sector with patient capital and reinforcing its shift from speculative to institutional-grade investment.

The Indian real estate industry received a significant boost from institutional investments in 2025, and the trend is set to continue. The office space, in particular, witnessed the largest outflow of investments, while residential, industrial, and mixed-use properties also received considerable attention. The rising institutionalization and robust demand for real estate properties indicate that the positive trend is likely to persist in the coming years, with core income properties remaining a priority for investors.