Institutional investments in Indian real estate have seen a strong start to 2025, with inflows reaching USD 1.3 billion in the first quarter, a 31% year-on-year (YoY) increase. This growth was primarily driven by domestic investments, which accounted for 60% of the total inflows during the quarter. With USD 0.8 billion inflows, domestic investments saw a 75% annual rise and were largely focused on industrial & warehousing and office segments.
The office segment drove one-third of the institutional inflows during the first quarter of 2025, at USD 0.4 billion worth of investments. Hyderabad attracted over half of the total inflows in the office segment in Q1 2025. The Industrial warehousing and residential segments also witnessed significant traction at the India level, cumulatively accounting for 47% of the total inflows during Q1 2025.
Badal Yagnik, Chief Executive Officer, Colliers India, said, "Institutional investors in Indian real estate continue to exhibit confidence, as investments rose by 31% YoY to USD 1.3 billion in Q1 2025. This growth highlights the resilience of Indian real estate and the untapped opportunities it presents. Both foreign and domestic investors remained committed towards core assets, with office, residential and industrial & warehousing segments cumulatively accounting for 80% of the institutional investments in Q1 2025. The momentum is expected to persist through 2025, supported by strong economic growth prospects, robust demand across asset classes and optimistic business sentiment. Anticipated easing of monetary policy in the near future and proactive government policies are likely to ensure capital deployment in both core and alternative real estate assets throughout the year."
In the first quarter of 2025, institutional investment inflows across various asset classes showed notable fluctuations compared to previous quarters. The office sector saw a decline of 23% year-on-year (YoY) and a 47% drop from the previous quarter, reaching USD 434.2 million. Residential investments surged by 195% YoY and 156% compared to the fourth quarter of 2024, amounting to USD 302.9 million. Alternative assets experienced an even more dramatic rise, with a 238% YoY increase and a 284% quarter-on-quarter (QoQ) growth, totalling USD 71.0 million.
Additionally, industrial and warehousing assets grew by 73% YoY, though they saw a sharp 58% decline from the prior quarter, reaching USD 307.7 million. Mixed-use developments saw a healthy 46% YoY increase and a 126% QoQ jump, amounting to USD 191.1 million. The retail sector showed no investment in Q1 2024 but saw inflows of USD 104.4 million in Q4 2024 before dropping to zero in Q1 2025, reflecting a 100% QoQ decline. Overall, total institutional investment in Q1 2025 stood at USD 1,306.9 million, marking a 31% increase YoY but a 31% decrease compared to Q4 2024.
During Q1 2025, institutional investments in the residential segment were almost thrice the inflows in the corresponding period 2024. The segment, with USD 0.3 billion inflows, accounted for 23% of the total quarterly investments, almost at par with the inflows in the industrial and warehousing segment. Interestingly, foreign investments, led by select large deals, accounted for over half of the total inflows in the residential segment during the quarter.
Vimal Nadar, Senior Director & Head of Research at Colliers India, said, "Residential real estate in India has been witnessing strong end-user demand in recent years. Institutional investments in the segment grew multi-fold to USD 0.3 billion during Q1 2025 on an annual basis. Amidst evolving capital deployment trends, leading global investors are increasingly partnering with domestic developers, forming joint venture platforms to capitalise on growing opportunities in the residential segment. Sustained growth in residential prices, rising demand for luxury housing, and ongoing infrastructure developments will continue to boost institutional investments in residential real estate in the upcoming quarters. Concurrently, likely reduction in repo rates can potentially fuel residential demand and thereby investments in mid & affordable housing as well."
In continuation to the growth momentum set in 2024, the Industrial & warehousing segment also saw over USD 0.3 billion of investments in Q1 2025, a notable 73% YoY increase. Improved investor confidence is reiterated by the strong performance of high-frequency macroeconomic indicators, including the Manufacturing Purchasing Manager’s Index (PMI) and the Index of Industrial Production (IIP). India’s Manufacturing PMI touched 58.1 in March 2025, the highest since mid-2024, indicating strong expansion in the manufacturing sector, driven by robust demand, increased production output, and improved business confidence.
Investments in alternate assets remained healthy at USD 0.07 billion during the quarter. Amongst alternate assets, data centres witnessed strong traction in Q1 2025, led by capital deployment in a proposed hyperscale data centre in Mumbai.
While multi-city deals corresponded to an overall 31% share, Mumbai, with about USD 0.3 billion inflows, accounted for 22% of the real estate investments in the country during Q1 2025. Bengaluru and Hyderabad followed closely with 20% and 18% share respectively. While Mixed-use assets accounted for over half of the quarterly inflows in Mumbai, the residential segment drove 55% of real estate investments in Bengaluru during Q1 2025.
