Institutional investments in Indian real estate hit all-time high of $8.47 bn in 2025: Report | Business News

Led by large office transactions, Bengaluru and Mumbai together attracted nearly half of total investments — around 47 per cent — during the year, with inflows of about $2.2 billion and $1.8 billion, respectively. Of the $4 billion invested in these two cities, office assets accounted for nearly three-fourths of the activity. Overall, five of the seven major Indian cities recorded a year-on-year rise in capital inflows in 2025.

Domestic institutional capital emerged as the primary driver of investments, with inflows more than doubling to $4.8 billion, accounting for 57 per cent of total investment volume. “The strong growth in domestic investor participation underscores rising confidence among Indian institutional investors, supported by improving asset quality, stable returns and greater market transparency,” Colliers said.

Foreign capital deployment moderated by 16 per cent year-on-year to $3.7 billion, though cross-border investments showed signs of recovery in the final quarter, pointing to a gradual improvement in global investor sentiment. Private equity investments reached a new peak in 2025, supported by record capital deployment in the last quarter. The October-December quarter of 2025 alone witnessed investments of $4.2 billion, the highest ever recorded in any quarter, indicating strong tailwinds for the sector.

Category-wise investment inflows

Office assets continued to attract the bulk of investments, accounting for 54 per cent of annual inflows. The Indian office market drew $4.5 billion in 2025, nearly double the level seen in 2024, backed by strong Grade A space uptake across major markets. The final quarter alone contributed nearly two-thirds of annual office investments.

The residential segment followed with $1.6 billion in inflows, posting a 36 per cent year-on-year growth and accounting for 18 per cent of total investments. Colliers attributed the momentum to favourable demographics, rising income levels and increased developer expansion into Tier II cities through joint-venture platforms, attracting both domestic and foreign investors.

Mixed-use, retail and alternative assets also saw healthy traction, collectively attracting about $1.5 billion, or nearly 17 per cent of total investments in 2025. Investor appetite in these segments continues to be driven by portfolio diversification and rising focus on demand-led assets such as data centres, co-living spaces and second homes.

“Investment traction is supported by strong operational performance and consecutive record-breaking Grade A office space uptake over the past three to four years. With over 370 million sq ft of existing office stock having the potential to be included in future REITs, we expect a greater degree of institutionalisation and consolidation, supported by cross-border capital flows in the coming years,” Colliers said.

Of the $2.3 billion invested through multi-city transactions in 2025, over 40 per cent was directed towards residential assets, reflecting growing investor interest in early-stage residential projects and expansion into newer markets, including emerging Tier-2 and Tier-3 cities.

Looking ahead, institutional investments are expected to strengthen further, supported by expanding domestic capital, improving global risk appetite and India’s strong economic fundamentals. “Core income-generating assets — particularly offices, industrial and logistics parks, and the residential segment — will remain priority areas for investors in 2026,” said Badal Yagnik, CEO and MD, Colliers India.

The institutional investment data includes capital deployed by family offices, foreign corporate groups, foreign banks, pension funds, private equity players, REITs, sovereign wealth funds and foreign-funded NBFCs, compiled from publicly available information.