Global Giants USA, Japan, Hong Kong Inject $1.06 bn Into Indian Real Estate, Drive 89% of Q2 2025 Foreign Inflow

New Delhi, July 7, 2025: The real estate sector received institutional investment of $1.80 billion in Q2 2025, registering a 42 per cent yearly decline from the highest-ever investment recorded in any quarter. However, investment more than doubled, recording a sharp 122 per cent growth over the previous quarter.

While foreign investment dominated investment activities in Q2 2025, the share declined from 71 per cent in Q2 2024 to 66 per cent in Q2 2025. In terms of value, foreign investment dropped by 46 per cent to $1.19 billion from $2.21 billion.

On the other hand, the share of co-investment almost doubled to 15 per cent from 8 per cent, registering a marginal hike of 2 per cent in terms of value. The shift from direct investment to co-investment by foreign investors underscores their cautious approach driven by a desire to mitigate risks amidst uncertain demand due to geopolitical conflicts and macroeconomic instability.

Amid global headwinds, investors from the USA, Japan and Hong Kong contributed around 89 per cent to the foreign investment recorded in Q2 2025. The share remained largely stable compared to the same period a year earlier.

Interestingly, a majority of the investment from these countries, around 69 per cent, was concentrated in commercial assets. Residential properties received only 11 per cent of the total investment whereas the rest were diverted towards diversified properties.

Note: Foreign investment made through a joint venture between multiple countries were also included for the analysis as a clear bifurcation of investment amounts was not available.

Source: Vestian Research

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

Source: Vestian Research

Note: Commercial assets include office, retail, co-working and hospitality projects.

Source: Vestian Research

“Institutional investment saw a strong recovery in Q2 2025 primarily fuelled by a sharp resurgence in commercial real estate activity compared to the previous quarter. While overall inflow remained lower on an annual basis, the substantial quarterly growth reflects renewed investor confidence supported by robust macroeconomic fundamentals and strong inherent demand,” said Shrinivas Rao, FRICS, CEO, Vestian.

“This growth momentum is expected to continue as several rating agencies predict economic growth of more than six per cent 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.”