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Institutional investments in Indian real estate saw a sharp 33% dip in the April-June quarter, touching USD 1.69 billion, primarily due to a cautious stance from global investors amid economic and geopolitical uncertainties. Data from Colliers India revealed that foreign investment nearly halved, while domestic participation surged by 32%. Notably, domestic capital now accounts for 48% of total real estate investments in H1 2025, up from 16% in 2021. This shift in funding dynamics has helped partially offset the decline in foreign institutional inflows and maintain a stable investment environment.
Institutional investments in Indian real estate witnessed a sharp decline of 33% in the April to June quarter, falling to USD 1.69 billion from USD 2.53 billion during the same period last year. As per recent data released by property consultancy firm Colliers India, the decline was primarily driven by a notable reduction in foreign capital inflows, as investors across the globe remained cautious amid evolving political tensions, inflationary concerns, and tightening credit conditions. Advertisement
The total foreign institutional investment in the second quarter dropped significantly to USD 1.04 billion, down from USD 2.04 billion in the corresponding period of the previous year. This nearly 49% fall highlights the growing apprehension among global investors in deploying large-scale capital in emerging markets, including India.
In stark contrast, domestic investors continued to display strong confidence in the country's real estate sector. They infused USD 642.8 million during April-June, marking a 32% increase from the USD 486.5 million recorded in the same quarter last year. This uptick reflects a growing reliance on local capital to drive real estate development, even as global flows slow down.
Colliers India CEO Badal Yagnik pointed out that domestic capital has steadily emerged as a key engine of growth in India's real estate market. He noted that its share in total institutional investments has increased from 16% in 2021 to 34% in 2024, and further to 48% during the first half of 2025. According to him, this rising domestic share has played a critical role in softening the impact of declining foreign investments and pushing overall institutional investment closer to the USD 3 billion mark during the first six months of this year.
Looking at the half-yearly performance, institutional investments across January to June stood at USD 2.99 billion, registering a 15% decline from USD 3.52 billion recorded in the same period last year. Foreign institutional investment for the first half of 2025 slipped to USD 1.57 billion from USD 2.59 billion year-on-year.
On the other hand, domestic investments surged by 53% during the same timeframe, rising to USD 1.42 billion from USD 934.7 million in the first half of 2024. This substantial increase further solidifies the position of Indian investors as key contributors to the sector's capital pool.
The institutional fund inflow covers a broad spectrum of sources, including pension funds, sovereign wealth funds, real estate private equity, listed REITs, family offices, proprietary books, foreign-funded NBFCs, foreign banks, and global corporate houses. While foreign capital traditionally formed the backbone of institutional investments, the recent data suggests a strategic pivot towards internal funding sources.
This shift is reshaping the contours of India's real estate investment landscape, signaling a more self-reliant and resilient financial ecosystem.
Source PTI
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