US, Japan, and Hong Kong Drive Foreign Investment in India’s Real Estate Market
The United States (US), Japan, and Hong Kong accounted for 89% of foreign institutional investment in India’s real estate market during the second quarter of 2025. This surge in investment drove a remarkable 242% quarter-on-quarter (QoQ) increase, from Rs. 2,982 crore (US$ 347 million) in Q2 2024 to Rs. 10,226 crore (US$ 1.19 billion) in Q2 2025, according to workplace solutions firm Vestian.
Of these investments, 69% were directed towards commercial assets, highlighting strong investor confidence in India’s commercial real estate sector. The remaining funds were allocated to diversified properties and residential assets, indicating a broad-based interest in India’s real estate landscape. This sharp rise in foreign investments reflects renewed investor optimism, supported by robust macroeconomic fundamentals and steady demand growth.
Chief Executive Officer of Vestian, Mr. Shrinivas Rao, emphasized that the institutional investment recovery in Q2 2025 was driven by enhanced foreign participation and a favorable economic outlook. He noted that foreign investors are increasingly shifting from direct investments to co-investments, whose share nearly doubled to 15%. This trend suggests a more risk-averse stance amid global uncertainties.
Looking ahead, Mr. Rao expressed optimism that economic growth exceeding 6% in FY26, combined with recent repo rate cuts, will further improve borrowing conditions and sustain momentum in the real estate sector. The repo rate cuts are expected to reduce borrowing costs, making it easier for developers and investors to finance projects, thereby boosting the overall market.
The real estate sector in India has been on a steady growth trajectory, driven by factors such as urbanization, a growing middle class, and a favorable business environment. The government's initiatives to improve infrastructure and ease of doing business have also played a crucial role in attracting foreign investments. The sector is expected to continue its upward trajectory, with further investments from global players likely to drive growth and innovation.
In conclusion, the significant increase in foreign institutional investment in India’s real estate market, particularly from the US, Japan, and Hong Kong, is a positive indicator of the sector's potential. As the economy continues to grow and borrowing conditions improve, the real estate market is poised for sustained growth and development.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
