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India’s real estate sector continues to show resilience even as foreign investors grow cautious amid global economic uncertainty. According to data from Vestian, institutional investments in Indian real estate touched USD 1.76 billion in the third quarter of 2025, the highest Q3 inflow in the past four years.
Although the total investment volume dipped slightly by 2% compared to the previous quarter, it still represented an impressive 83% year-on-year jump, signalling sustained confidence in the long-term potential of India’s property market.
“Driven largely by the commercial asset class, institutional investments in Indian real estate have surged by 83% year-on-year, reaffirming the sector’s strong resilience amid global headwinds,” said Shrinivas Rao, FRICS, CEO of Vestian.
Commercial Real Estate Leads the Pack
The commercial segment continued to dominate investor sentiment, accounting for a record 79% share of total institutional inflows, significantly higher than 61% in the previous quarter and 71% during the same period last year.
In absolute terms, commercial real estate attracted nearly USD 1.4 billion, marking a remarkable 104% annual growth. The surge highlights sustained demand for high-quality office spaces, data centres, and commercial assets in major urban hubs, driven by India’s expanding services economy and hybrid work models stabilising after the pandemic.
Investors are viewing Grade-A office assets and managed commercial properties as long-term, income-generating opportunities that remain relatively insulated from short-term global volatility.
Residential Sector Sees a Slowdown
The residential segment, which accounted for 11% of total institutional investments in Q3 2025, recorded a more subdued performance. It attracted USD 191.7 million, reflecting a 49% drop from the previous quarter, even though it posted a modest 6% year-on-year increase.
This decline stems largely from the sharp rise in project costs and cautious funding sentiment among large investors following consecutive quarters of aggressive residential launches.
While end-user demand for housing remains strong, particularly in mid-income and premium categories, institutional capital is now moving more selectively into projects with clear visibility on sales, regulatory compliance, and completion timelines.
Industrial and Warehousing Back in Focus
A bright spot this quarter came from the industrial and warehousing segment, which accounted for around 5% of total institutional inflows. Though still a small share, investments in this category rose by a staggering 168% over the previous quarter, reaching USD 85.8 million.
The growth underscores the rapid expansion of India’s logistics and e-commerce ecosystems, supported by infrastructure development, growing consumption, and the government’s focus on manufacturing through initiatives such as Make in India and PM Gati Shakti.
Large logistics parks, integrated industrial townships, and last-mile warehousing facilities are increasingly attracting domestic investors and private equity firms looking to capture India’s supply chain transformation story.
Shift in Investor Composition: Domestic Capital Takes the Lead
Perhaps the most striking trend in Q3 2025 was the changing mix of investors. Foreign participation in India’s real estate market dropped sharply, while domestic investors took centre stage.
The share of foreign investments fell to a yearly low of 8%, as global economic pressures, high interest rates, and policy uncertainties made overseas investors more cautious. In contrast, domestic investments surged to 51%, the highest in recent years, showing an annual growth of 115% and a quarterly jump of 166%.
This rise highlights the increasing confidence of Indian institutional investors, family offices, and funds in local assets. It also marks a growing maturity of domestic capital markets, which are now capable of supporting large-scale real estate financing without heavy dependence on foreign inflows.
Interestingly, co-investments, partnerships between foreign and domestic investors also rose sharply, accounting for 41% of total institutional inflows in Q3, up from just 15% in the previous quarter. This trend reflects a strategic realignment by global investors, who are now choosing to enter India’s market through joint ventures with local developers and fund managers.
A Resilient Market in a Volatile World
Despite global headwinds, including inflationary pressures, monetary tightening, and geopolitical uncertainty, India’s real estate market remains one of the most attractive and stable investment destinations in Asia. The sector continues to benefit from strong domestic demand, steady urbanisation, and government-led infrastructure growth.
As Vestian’s analysis suggests, India’s real estate story in 2025 is being rewritten from within. Domestic capital is no longer a passive participant but a driving force, filling gaps left by retreating foreign investors and keeping the growth engine firmly in motion.
Even as global uncertainty lingers, India’s mix of large-scale projects, strong fundamentals, and a deepening investor base ensures that the country’s real estate sector remains not just resilient, but increasingly self-reliant.
