Domestic Investors Bolster Sector with $541.1 Million Amid Cautious Foreign Participation
The Indian real estate market witnessed a significant downturn in foreign institutional investments during the first quarter of 2025, according to a recent report by Vestian. Institutional inflows from foreign funds plummeted by a staggering 99 percent, with only $11 million being invested, compared to $791.4 million during the same period last year.
In contrast, domestic investors displayed a bullish outlook on India’s growth prospects, injecting $541.1 million into the real estate sector, marking a notable 21 percent increase from the previous year’s $446.9 million.
Shrinivas Rao, CEO of Vestian, attributed the cautious stance of foreign investors to global macroeconomic uncertainty and geopolitical tensions. Despite the challenging external environment, domestic investors remain optimistic about India’s economic trajectory, driving sustained investments in real estate.
Commercial assets, including office spaces, retail outlets, co-working spaces, and hospitality projects, emerged as the preferred investment avenue, attracting $231.6 million in the March quarter. However, this figure represents a decline from the $484.8 million recorded in the corresponding period last year.
Institutional investments in residential assets also witnessed a downturn, falling by 33 percent to $225 million from $337.7 million previously. Similarly, investments in the industrial and warehousing sector decreased by 73 percent, amounting to $58.9 million compared to $215.8 million a year ago.
Bengaluru emerged as the top destination for institutional investments, with $299 million flowing into the city, followed by Delhi-NCR with $110 million. Together, these two cities accounted for approximately 74 percent of the total investments received during the quarter.
Edelweiss Capital emerged as the most active investor during the period, with investments exceeding $300 million across various asset classes and geographies, as per Vestian.
Looking ahead, Rao expressed optimism about the investment outlook for the Indian real estate sector, citing a strengthened economic scenario and robust demand as key drivers for increased investments in the coming months.
