High-derabad

Hyderabad attracted over half of the total inflows in the office segment in Q1 2025.

GURGAON,Apr 3 (The CONNECT)- Institutional investments in Indian real estate have seen a strong start to 2025, with inflows reaching USD 1.3 billion in the first quarter—a 31% year-on-year (YoY) increase. This growth was primarily driven by domestic investments, which accounted for 60% of the total inflows during the quarter. With USD 0.8 billion inflows, domestic investments saw a 75% annual rise and were largely focused on industrial & warehousing and office segments.

Office segment drove one-third of the institutional inflows during the first quarter of 2025, at USD 0.4 billion worth of investments. Hyderabad attracted over half of the total inflows in the office segment in Q1 2025. At the India level, Industrial & warehousing and residential segments too witnessed significant traction, cumulatively accounting for 47% of the total inflows during Q1 2025.

“Institutional investors in Indian real estate continue to exhibit confidence, as investments rose by 31% YoY to USD 1.3 billion in Q1 2025. This growth highlights the resilience of the Indian real estate and the untapped opportunities it presents. Both foreign and domestic investors remained committed towards core assets, with office, residential and industrial & warehousing segments cumulatively accounting for 80% of the institutional investments in Q1 2025. The momentum is expected to persist through 2025, supported by strong economic growth prospects, robust demand across asset classes and optimistic business sentiment. Anticipated easing of monetary policy in the near future and proactive government policies are likely to ensure capital deployment in both core and alternative real estate assets throughout the year,” said Badal Yagnik, Chief Executive Officer, Colliers India.

Trends in institutional investment inflows (USD million) –

*Note: Alternate assets include data centers, life sciences, senior housing, holiday homes, student housing, schools etc.

Investment inflows were limited for Retail assets in Q1 2024 and Q1 2025

The institutional flow of funds includes investments by family offices, foreign corporate groups, foreign banks, proprietary books, pension funds, private equity, real estate fund-cum-developers, foreign-funded NBFCs, listed REITs and sovereign wealth funds. The data has been compiled as per available information in the public domain

During Q1 2025, institutional investments in the residential segment was almost thrice the inflows in the corresponding period of 2024. The segment with USD 0.3 billion inflows, accounted for 23% of the total quarterly investments, almost at par with the inflows in industrial & warehousing segment. Interestingly, foreign investments accounted for over half of the total inflows in residential segment during the quarter, led by select large deals.

“Residential real estate in India has been witnessing strong end user demand in recent years. Institutional investments in the segment grew multi-fold to the tune of USD 0.3 billion during Q1 2025, on an annual basis. Amidst evolving capital deployment trends, leading global investors are increasingly partnering with domestic developers, forming joint venture platforms to capitalize on growing opportunities in the residential segment. Sustained growth in residential prices, rising demand for luxury housing, and ongoing infrastructure developments will continue to boost institutional investments in residential real estate in the upcoming quarters. Concurrently, likely reduction in repo rates can potentially fuel residential demand and thereby investments in mid & affordable housing as well,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

In continuation to the growth momentum set in 2024, the Industrial & warehousing segment also saw over USD 0.3 billion of investments in Q1 2025, a notable 73% YoY increase. Improved investor confidence is reiterated by strong performance of high frequency macro-economic indicators including Manufacturing Purchasing Manager’s Index (PMI) and Index of Industrial Production (IIP). India’s Manufacturing PMI touched 58.1 in March 2025, the highest since mid-2024 indicating strong expansion in the manufacturing sector, driven by robust demand, increased production output, and improved business confidence.

Investments in alternate assets remained healthy at USD 0.07 billion during the quarter. Amongst alternate assets, data centers particularly witnessed strong traction in Q1 2025, led by capital deployment in a proposed hyperscale data center in Mumbai.

Mumbai followed by Bengaluru attracted majority of the inflows in Q1 2025

While multi-city deals corresponded to an overall 31% share, Mumbai, with about USD 0.3 billion inflows accounted for 22% of the real estate investments in the country during Q1 2025. Bengaluru and Hyderabad followed closely with 20% and 18% share respectively. While Mixed-use assets accounted for over half of the quarterly inflows in Mumbai, the residential segment drove 55% of real estate investments in Bengaluru during Q1 2025.

City wise investment inflows in Q1 2025 –

Source: Colliers

Note: *Investment inflows in Pune were limited in Q1 2025