Why Foreign Investors are Pouring Money into India's Real Estate Market

Japan's biggest property developer, Mitsui Fudosan, is set to invest 30-35 billion yen ($190-$225 million) or more into Indian property projects, according to Reuters. This move comes as Mitsui Fudosan, which entered India in 2020, continues to expand its presence through partnerships with local developers like RMZ Real Estate, which is building an office complex in Bengaluru.

RMZ Real Estate CEO Avnish Singh told Reuters that the trust between Japanese developers and local partners has been firmly established, opening the floodgates for further investments. “The floodgates can open and have opened,” Singh said, highlighting the growing confidence among Japanese investors.

Sumitomo Realty and Development, Japan's third-largest developer, has already committed $6.5 billion across five projects in Mumbai, including two new sites added this year. Sumitomo views Mumbai as its second engine of growth after Tokyo and is actively scouting for land around the soon-to-be operational Navi Mumbai city airport for new investments.

Other Japanese developers, such as Daibiru Corp, have also entered the Indian market with office deals in two cities last year and are now exploring opportunities in residential buildings and data centers. Anand Jayaraman, South Asia CEO of Mitsui O.S.K. Lines, the parent company of Daibiru Corp, told Reuters that they are actively looking for land and diversifying their portfolio.

Japanese investors are not alone in their pursuit of gains in the Indian real estate market. US investment firm Blackstone, which is India's biggest commercial landlord, has invested roughly half of its $50 billion in Indian assets into real estate. This significant investment underscores the market's potential and the growing confidence among global investors.

India is emerging as one of Asia Pacific’s most promising real estate investment markets, driven by fresh capital platforms, deeper institutional participation, and a broader range of asset classes. New funds such as PRIME Office Fund, Artha Global Opportunities, DRA–Balajadia, and SGRE reflect the growing confidence in the market, with both domestic and global investors accelerating their deployments across core and alternative assets ahead of 2026.

Foreign investors are attracted to the Indian real estate market due to its high growth potential, rising demand across residential, commercial, and logistics segments, and real-asset stability. For global investors seeking long-term value, inflation hedging, and exposure to emerging-market growth, Indian real estate offers a compelling balance of risk and reward.

Capital flows into India are diversifying beyond traditional office and residential segments. Investors are showing greater interest in logistics, data centers, industrial parks, senior living, land acquisition vehicles, and development-focused strategies. The expansion of purpose-built platforms and specialized funds signals a maturing ecosystem, where private equity firms, sovereign funds, and domestic institutions are committing capital across income-yielding assets as well as build-to-core and value-add opportunities.

Foreign investors dominated institutional investments with a 54% share in 2024, accounting for USD 3.7 billion, despite a sharp reduction from 65% in 2023, according to Vestian Research. The industrial and warehousing sector saw a significant 190% year-over-year increase, accounting for 39% of total inflows, as per a government report.

As per Colliers’ 2026 Global Investor Outlook, there is a decisive shift toward Asia Pacific (APAC), with investors re-entering global real estate markets with renewed confidence. The report, based on proprietary research and a global survey of institutional investors, notes improving fundamentals, stabilising pricing, and returning liquidity across major markets. APAC’s rising prominence reflects its strong economic fundamentals, innovation-led growth, and expanding middle class, with capital raising in the region surging more than 130% since 2024. APAC now accounts for 11% of global fundraising in the first nine months of 2025, according to PERE, with India emerging as a key beneficiary of this shift.

While markets such as Japan, Australia, and Singapore remain top destinations for cross-border capital, investors are increasingly turning to India for higher returns and scalable deployment opportunities. India’s strengthening macroeconomic position, expanding digital infrastructure, and robust development pipeline have further elevated its position within APAC’s investment landscape. Both domestic and offshore investors are positioning themselves to capitalize on the deepening pool of institutional-grade assets.

Global investors continue to view India as one of APAC’s most promising real estate destinations, supported by favourable demographics, a stable policy environment, and rising consumption levels. Cross-border participation is gaining momentum, enhanced by stronger equity markets, REIT expansions, and new IPO activity. Investors are actively deploying capital across land and development assets, data centers, industrial and logistics parks, office and residential projects, and emerging specialized segments.

“Investments in India’s real estate sector have demonstrated remarkable resilience, underscoring the depth of the market and growing investor confidence. We foresee annual investments to the tune of USD 5–7 billion each in 2025 and 2026, driven by a balanced interplay of foreign and domestic investors. Indian real estate continues to benefit from structural demand levers such as robust domestic economic growth, rising urbanisation, infrastructure augmentation, and rising consumption levels,” said Badal Yagnik, Chief Executive Officer & Managing Director, Colliers India.

“Building on the momentum of 2025, India’s real estate investment landscape is poised for a stronger 2026, underpinned by robust demand across core assets and a deepening pipeline of institutional-grade supply. Office and residential segments will continue to dominate the investments, driving over half of the total inflows, while the Industrial & Logistics segment will likely see renewed momentum. Among alternative assets, data centers are likely to see increased investments, driven by the rapid expansion of digital infrastructure and hyperscale demand. Cross-border capital will continue to remain a critical driver, as India consolidates its position as one of the emerging destinations for stable, long-term real estate investment in the APAC region,” Yagnik added.

Institutional investments in Indian real estate totalled USD 4.3 billion in the first nine months of 2025, supported by steady momentum across the first three quarters. Office and residential segments are expected to contribute nearly 60% of full-year investments, backed by active occupier demand and a healthy supply pipeline. Transaction closures are likely to pick up in the final quarter, reinforcing expectations of USD 5–7 billion in annual inflows, as per the report.