The three countries drove an increase in foreign investments, which rose 242 per cent quarter-on-quarter (Q-o-Q), from $347 million in Q2 2024 to $1.19 billion in Q2 2025.
‘Around 69 per cent of the investments from these countries were concentrated in commercial assets. Residential properties received only 11 per cent of the total investments, whereas the rest were diverted towards diversified properties,’ the report stated.
However, institutional investment in the Indian real estate market fell 42 per cent year-on-year (Y-o-Y) to $1.80 billion in Q2 2025, from $3.12 billion in the same period last year, owing to a drop in investment across all asset types.
This comes even as investments more than doubled sequentially, recording 122 per cent growth over Q1 2025, driven by stronger foreign participation.
Commenting on the trend, Shrinivas Rao, chief executive officer at Vestian, said institutional investments saw a recovery in Q2 2025, primarily fuelled 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,’ he added.
The report noted that domestic investors accounted for just 19 per cent of total investments in Q2 2025, down from 21 per cent in the same period last year.
In value terms, domestic investments stood at $336 million, marking a 47 per cent Y-o-Y decline from $638 million in Q2 2024.
‘The decline reflects cautious sentiment among domestic players amid market uncertainty due to geopolitical conflicts and trade tariffs,’ it said.
The report also highlighted that while foreign investments dominated overall activity in Q2 2025, their share declined from 71 per cent in Q2 2024 to 66 per cent in Q2 2025.
In terms of value, foreign investments dropped 46 per cent to $1.19 billion, from $2.21 billion last year.
On the other hand, the share of co-investments almost doubled to 15 per cent from 8 per cent last year, registering a marginal increase of 2 per cent in value terms.
‘The shift from direct investments to co-investments by foreign investors underscores their cautious approach, driven by a desire to mitigate risks amid uncertain demand due to geopolitical conflicts and macroeconomic instability,’ the report added.
Rao said the growth momentum is expected to continue, as several rating agencies predict economic growth of over 6 per cent during the financial year 2025–26 (FY26).
‘Moreover, the recent reduction in the repo rate is expected to bolster positive sentiment by reducing borrowing costs and improving credit access for the sector,’ he said.
 "realty sector, real estate")