Surging Institutional Investments: A Mixed Outlook for Indian Real Estate

Institutional investments in Indian real estate increased by 61% to USD 6.8 billion last year. While the growth surpassed pre-pandemic levels, 2025 could pose challenges due to geopolitical tensions and economic slowdowns. Foreign investors contributed significantly, with co-investments gaining popularity amid global uncertainties.

The Indian real estate sector witnessed a remarkable 61% rise in institutional investments, reaching USD 6.8 billion last year, according to real estate consultant Vestian. This growth reflects a recovery from pre-pandemic levels, with significant contributions from foreign investors.

Shrinivas Rao, CEO of Vestian, highlighted the challenges for 2025, citing increased geopolitical frictions and a global economic downturn. Of the total investments, 30% targeted the residential sector, while commercial assets received 35% and industrial parks 28%.

Interestingly, co-investments became more prevalent, with foreign investors leaning on local expertise amid uncertainties. The potential for further growth in 2025 hinges on actions by the Reserve Bank of India, such as reducing the repo rate to encourage more investment and lower mortgage rates, which could stimulate real estate activities.

(With inputs from agencies.)