Institutional Investments in Indian Real Estate Drop 42% Year-on-Year in Q2 2025

India’s real estate sector witnessed a significant downturn in institutional investments during the second quarter of 2025, registering a 42% decline compared to the same period last year. According to a report by real estate consultancy Vestian, total inflows stood at USD 1.80 billion, down from the record highs of Q2 2024, despite a sharp 122% surge over the previous quarter.

The decline is attributed to global trade disruptions, geopolitical tensions, and cautious investor sentiment. Foreign investments, which accounted for 66% of the total inflows, dropped 46% year-on-year to USD 1.19 billion. Investors from the U.S., Japan, and Hong Kong contributed nearly 89% of these foreign investments, with a strong preference for commercial assets such as retail, office spaces, and hospitality projects.

Domestic investments also saw a steep fall, comprising just 19% of the total, with a 47% annual decline in value. Structured debt and co-investment models gained traction, reflecting a shift in strategy among foreign investors seeking to mitigate risks amid macroeconomic instability.

Notable deals during the quarter included Blackstone’s acquisition of South City Mall for USD 380 million and Kanakia Group’s joint venture with global firms to develop a Grade-A office project in Mumbai’s Bandra Kurla Complex. Bengaluru’s Century Group also secured USD 215 million in structured debt from international investors.

Despite the annual dip, experts suggest the quarterly rebound signals renewed confidence, supported by strong domestic demand and favorable macroeconomic indicators. The recent repo rate cut is expected to further improve credit access and bolster sentiment in the coming quarters.