Institutional Investments in Indian Real Estate Jump 83% YoY in Q3 2025; Domestic Funds Take the Lead: Vestian

Institutional investments in India’s real estate market rose sharply in the third quarter of 2025, touching USD 1.76 billion, the highest Q3 inflow in four years, according to a new report by Vestian Research. The quarterly tally represents an 83% year-on-year increase, even as it marked a marginal 2% dip from the previous quarter.

The commercial real estate segment dominated the landscape, drawing 79% of total investments worth USD 1.4 billion, up 104% year-on-year. This category—which includes offices, retail, co-working, and hospitality assets—outperformed all others by a wide margin. The residential sector attracted USD 192 million, accounting for 11% of the total inflow but slipping 49% sequentially. Meanwhile, the industrial and warehousing segment saw robust activity, surging 168% over the previous quarter to USD 86 million, driven by rising logistics demand.

A striking trend in Q3 2025 was the sharp shift toward domestic capital. The share of domestic institutional investments jumped to 51%, marking 115% annual and 166% quarterly growth, while foreign inflows fell to just 8%, the lowest in recent years. Interestingly, co-investments—partnerships between foreign and Indian investors—rose to 41% of total inflows, indicating a growing preference for collaborative funding models amid global economic uncertainty.

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“Driven largely by commercial assets, institutional investments in Indian real estate surged 83% year-on-year, reaffirming the sector’s strong resilience amid global headwinds,” said Shrinivas Rao, FRICS, CEO of Vestian. “The increasing role of domestic investors highlights deepening confidence in India’s growth story and real estate fundamentals.”

Vestian noted that despite volatile global markets, India’s real estate investment outlook remains optimistic, buoyed by steady demand for Grade-A commercial spaces, expanding warehousing hubs, and maturing capital markets.

India’s real estate sector is steadily becoming a key pillar of the country’s economic growth. Its contribution to the national GDP has climbed from less than 5% in the early 2000s to around 6–8% today, and projections suggest it could rise to 14–20% by 2047 — potentially evolving into a USD 10 trillion growth driver.

A joint study by Colliers and CREDAI estimates that by the time India marks 100 years of Independence in 2047, the economy could reach USD 35–40 trillion. The report highlights four major forces steering this expansion — rapid urbanisation, accelerated infrastructure development, a surge in affordable housing demand, and widespread digital transformation — all of which are expected to reinforce the real estate sector’s long-term momentum.