US, Japan and Hong Kong Account for 89% of Q2 Foreign Investments in Indian Real Estate

India's real estate market fetched institutional investments of $1.80 billion in the second quarter of 2025 (April to June) with most foreign money pouring in from the United States, Japan, and Hong Kong.

The three nations accounted for almost 89% of the overall foreign investment, reported a paper made public on Monday.

According to Vestian findings, investment inflows doubled more than twice in Q2 with a notable 122% rise from the previous quarter.

Foreign investors dominated this phase, with their capital invested mainly in commercial real estate. Of particular interest, approximately 69% of US, Japanese, and Hong Kong investments were concentrated in commercial assets. A mere 11% was invested in residential projects, while the rest went into diversified portfolios of real estate.

The share of co-investments registered a significant growth, almost doubling to 15% from 8% last quarter. This was followed by a marginal 2% increase in investment value.

The report indicated that this increased inclination towards co-investments instead of direct investments by foreign investors is a more cautious approach. It indicates a risk-averse approach driven by global uncertainties like geopolitical tensions and macroeconomic volatility.

Institutional investments recovered strongly in Q2 2025, led mainly by a sharp bounce back in commercial real estate activity from the preceding quarter. While total inflows continued to be lower on a year-on-year basis, the strong quarterly growth indicates improved investor sentiment fueled by solid macroeconomic fundamentals and good intrinsic demand," according to Shrinivas Rao, FRICS, CEO, Vestian.

The report also expects the upward trend to continue with the help of positive economic outlook. A number of rating agencies have predicted India's economic growth at over 6% during fiscal year 2026.

Furthermore, the recent cut in the repo rate is likely to boost investor sentiment by decreasing borrowing costs and augmenting credit availability for the sector, Rao added.

In contrast, domestic investors accounted for 19% of total investments in Q2 2025, down from 21% during the same period last year. Domestically, investment stood at $336 million in terms of money.