US, Japan, and Hong Kong Drive 89% of Q2 Foreign Inflows in Indian Real Estate
Indian real estate saw a significant surge in institutional investments in Q2 2025, with foreign investors from the US, Japan, and Hong Kong contributing 89% of the total. Domestic investments also saw a modest increase.
Real EstateInstitutional InvestmentsForeign InflowsCommercial AssetsCoinvestmentsReal Estate NewsJul 07, 2025
Investments in the sector more than doubled in Q2, marking a substantial 122% growth over the previous quarter, according to the Vestian report. This surge in investments is a clear indication of the renewed confidence among investors in the Indian real estate market.
Foreign investments dominated the investment activities in Q2. A significant 69% of the investments from the US, Japan, and Hong Kong were concentrated in commercial assets. In contrast, residential properties received only 11% of the total investments, with the remaining funds allocated to diversified properties.
The share of co-investments nearly doubled to 15% from 8%, marking a marginal increase of 2% in terms of value. This shift from direct investments to co-investments by foreign investors highlights their cautious approach, driven by a desire to mitigate risks amidst uncertain demand due to geopolitical conflicts and macroeconomic instability, as the report suggests.
Shrinivas Rao, FRICS, CEO of Vestian, commented on the strong recovery in institutional investments in Q2 2025. He noted, 'Institutional investments saw a significant resurgence, primarily fueled by a sharp increase in commercial real estate activity compared to the previous quarter. While overall inflows remain lower on an annual basis, the substantial quarterly growth reflects renewed investor confidence, supported by robust macroeconomic fundamentals and strong inherent demand.'
This positive momentum is expected to continue, as several rating agencies predict economic growth of more than 6% during FY 2026. The recent reduction in the repo rate is also expected to bolster positive sentiment by reducing borrowing costs and improving credit access for the sector, as Rao mentioned.
Domestic investors accounted for 19% of the total investments in Q2 2025, a slight decrease from 21% in the same period last year. In value terms, domestic investments stood at $336 million.
—IANS
Frequently Asked Questions
What percentage of Q2 foreign investments in Indian real estate came from the US, Japan, and Hong Kong?
Around 89% of the foreign investments in Q2 2025 came from the US, Japan, and Hong Kong.
How much did institutional investments in Indian real estate grow in Q2 2025 compared to the previous quarter?
Institutional investments in Indian real estate grew by 122% in Q2 2025 compared to the previous quarter.
What types of properties received the most foreign investments in Q2 2025?
Commercial assets received the majority of foreign investments, accounting for 69% of the total.
What is the significance of the increase in co-investments in Q2 2025?
The increase in co-investments reflects a cautious approach by foreign investors to mitigate risks in an uncertain economic environment.
What is the predicted economic growth for FY 2026 in India?
Several rating agencies predict economic growth of more than 6% for FY 2026 in India.
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