Institutional investments in India’s real estate sector are projected to decline by 37% to USD 3.06 billion in the first half of 2025, down from USD 4.89 billion during the same period last year. According to JLL India, this downturn is largely attributed to prolonged global economic uncertainties and geopolitical instability. However, investor interest—particularly in residential projects—remains intact, with foreign investors accounting for 68% of inflows. Despite the short-term drag, experts foresee a recovery in the latter half of the year, supported by a robust pipeline of deals and consistent performance from public market instruments such as REITs and QIPs.
Sharp Investment Decline in H1 2025
India’s real estate market, long viewed as a resilient destination for global and domestic capital, has seen institutional investment flows decline sharply in the first half of 2025. JLL India estimates that the sector attracted USD 3.06 billion during the January–June period, marking a 37% decrease compared to USD 4.89 billion in the same period last year.
The downturn has been attributed to a complex blend of global economic slowdown, inflationary pressures, and political tensions that have extended transaction timelines and subdued investor sentiment.
Foreign Investors Maintain Dominance
Despite the slump, foreign investors continued to dominate the institutional investment landscape, contributing 68% of the total inflows. Domestic investors, while more cautious, still accounted for a respectable 32%. The data underscores the sustained appeal of Indian real estate as a long-term asset class among global capital allocators, even amidst volatile macroeconomic conditions.
Moreover, international investors are increasingly tapping public market routes such as Real Estate Investment Trusts (REITs), Qualified Institutional Placements (QIPs), and investments in listed real estate companies—indicating confidence in the sector’s formalized, transparent frameworks.
Residential Segment Leads the Way
The residential sector emerged as the frontrunner in terms of capital deployment, capturing 38% of the total institutional investment pie. This signals renewed confidence in India’s housing market, likely driven by steady demand in mid-income and premium segments, ongoing urbanization, and improving housing affordability metrics.
The performance of this segment aligns with broader trends indicating a shift in investor preference towards income-generating and consumption-driven assets in uncertain times.
Optimism in the Face of Volatility
Lata Pillai, Senior Managing Director and Head of Capital Markets at JLL India, maintained a confident outlook. “India's real estate sector remains a compelling investment destination,” she noted, highlighting that short-term challenges are not indicative of structural weakness. Pillai also emphasized that the market has consistently attracted over USD 5 billion in annual investments over the past five years and is on track to match that benchmark in 2025.
She added that a pipeline exceeding USD 1 billion is currently in progress, pointing to a likely rebound in investment activity during the second half of the year.
Outlook: Resilient Fundamentals, Renewed Momentum Expected
Although the first half of 2025 has seen a deceleration in capital inflows, the underlying fundamentals of the Indian real estate sector remain strong. Robust domestic demand, government-backed regulatory frameworks, and a maturing ecosystem of REITs and institutional players are likely to restore investor momentum.
As global uncertainties begin to stabilize, India’s real estate market is expected to regain its growth trajectory, bolstered by both foreign and domestic capital. Institutional investors, while currently cautious, are expected to re-engage actively, reaffirming the sector’s position as a vital component of India’s investment landscape.
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