USA, Japan & Hong Kong Inject $1.06 Bn in Indian Real Estate: Vestian

India’s real estate sector attracted institutional investments worth USD 1.80 billion in Q2 2025, marking a sharp 122% rise over Q1 2025 but a 42% decline compared to the record high in Q2 2024.

While foreign investors continued to lead the inflow, their share fell to 66% from 71% a year ago, with total foreign investments dipping 46% to USD 1.19 billion. Co-investments gained traction, rising to 15% from 8% YoY, indicating a shift in investor strategy toward risk-sharing amid global uncertainties.

Investors from the US, Japan, and Hong Kong accounted for nearly 89% of total foreign inflows, with 69% of these funds allocated to commercial assets. Residential properties received just 11% of the overall investment, while the remaining was directed toward diversified assets.

Domestic investors accounted for 19% of the total investments in Q2 2025, down from 21% in the same period last year. In value terms, domestic investments stood at USD 336 Mn, marking a 47% annual decline and a 28% drop compared to the previous quarter. The decline reflects cautious sentiment among domestic players amid market uncertainty due to geopolitical conflicts and trade tariffs.

Shrinivas Rao, FRICS, CEO, Vestian said, “Institutional investments saw a strong recovery in Q2 2025, primarily fueled by a sharp resurgence in commercial real estate activity compared to the previous quarter. While overall inflows remained lower on an annual basis, the substantial quarterly growth reflects renewed investor confidence supported by robust macroeconomic fundamentals and strong inherent demand. This growth momentum is expected to continue as several rating agencies predict economic growth of more than 6% during FY 2026. Moreover, the recent reduction in the repo rate is expected to bolster positive sentiment by reducing borrowing costs and improving credit access for the sector.”