USA, Japan, Hong Kong pump $1.06 bn into Indian realty in Q2: Top deals

In Q2 2025, India's real estate sector attracted institutional investments totaling $1.80 bn, marking a 42% year-on-year decline from record highs but showing 122% growth compared to previous quarter

India’s real estate sector attracted institutional investments worth $1.80 billion in the second quarter of 2025, reflecting a 42% year-on-year decline from the record highs of the same quarter last year. However, quarter-on-quarter performance showed strong recovery with 122% growth, signalling a rebound in investor sentiment despite global uncertainty, shows data analysed by Vestian, an occupier-focused workplace solutions firm specializing in commercial, residential, industrial, retail and hospitality sectors. 

 

While foreign investments dominated investment activities in Q2 2025, the share declined from 71% in Q2 2024 to 66% in Q2 2025. In terms of value, foreign investments dropped by 46% to $1.19 billion from $2.21 billion. On the other hand, the share of co-investments almost doubled to 15% from 8%, registering a marginal hike of 2% in terms of value. The shift from direct investments to co-investments by foreign investors' underscores their cautious approach, driven by a desire to mitigate risks amidst uncertain demand due to geopolitical conflicts and macroeconomic instability.

 

Amid global headwinds, investors from the USA, Japan, and Hong Kong contributed around 89% to the foreign investments recorded in Q2 2025. The share remained largely stable compared to the same period a year earlier. Interestingly, majority of the investments from these countries, around 69%, were concentrated in commercial assets. Residential properties received only 11% of the total investments, whereas the rest were diverted towards diversified properties. 

 

Domestic investors accounted for 19% of the total investments in Q2 2025, down from 21% in the same period last year. In value terms, domestic investments stood at $336 million, marking a 47% annual decline and a 28% drop compared to the previous quarter. The decline reflects cautious sentiment among domestic players amid market uncertainty due to geopolitical conflicts and trade tariffs. 

 

“Institutional investments saw a strong recovery in Q2 2025, primarily fueled by a sharp resurgence in commercial real estate activity compared to the previous quarter. While overall inflows remained lower on an annual basis, the substantial quarterly growth reflects renewed investor confidence supported by robust macroeconomic fundamentals and strong inherent demand. This growth momentum is expected to continue as several rating agencies predict economic growth of more than 6% during FY 2026," said Shrinivas Rao, FRICS, CEO, Vestian.  Institutional Investment by Asset Type (Q2 2025 vs Q2 2024) 

 

 

The industrial and warehousing sector recorded a steep decline in investments during Q2 2025, with its share plummeting from 48% in Q2 2024 to a mere 2% in Q2 2025. Correspondingly, investment value also dropped by 98% annually. The sharp decline is driven by last year’s high base and relatively fewer large-scale transactions in this quarter.

 

Commercial assets dominated investments in Q2 2025 with 61% share, registering a sharp rise from 20% in the same period last year. In value terms, investments increased by 76% annually, reaching $1.09 Bn in Q2 2025. The surge can be attributed to rising investor interest in office  spaces, driven by increasing demand from GCCs.  Institutional Investment by Investor Type (Q2 2025 vs Q2 2024) 

 

 

Key Institutional deals:

 

Blackstone’s acquisition of Kolkata’s South City Mall was one of the largest retail real estate deals in eastern India, underscoring growing confidence and institutional appetite in Indian commercial real estate, especially in high-quality retail spaces. This was the largest deal of Q2 2025, worth $380 Mn.

 

In another deal, Kanakia Group formed a USD 353 Mn joint venture with global investors, such as Hines, Mitsubishi Estate, and Sumitomo, to develop a 1.5 Mn sq ft Grade-A office project in Bandra Kurla Complex, Mumbai. 

 

Bengaluru’s Century Group raised USD 215 Mn in structured debt from global investors, Ares Asia and SC Lowy, marking one of the largest private real estate funding deals in recent quarters.