How Are the US, Japan, and Hong Kong Driving 89% of Q2 Foreign Investments in Indian Real Estate?
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Synopsis
The Indian real estate market sees a remarkable surge in foreign investments, driven predominantly by the US, Japan, and Hong Kong, accounting for 89% of the total. This impressive growth is a testament to renewed investor confidence amid a recovering commercial sector.
Key Takeaways
- Institutional investments in Indian real estate reached $1.80 billion in Q2 2025.
- Investors from the US, Japan, and Hong Kong contributed 89% of foreign investments.
- Commercial properties attracted 69% of foreign investments.
- Co-investments rose to 15% from 8%.
- Economic growth is predicted to exceed 6% for FY 2026.
New Delhi, July 7 (NationPress) The Indian real estate sector witnessed institutional investments totaling $1.80 billion during the April to June period (Q2 2025), with investors hailing from the US, Japan, and Hong Kong accounting for approximately 89 percent of these foreign investments, as per a report released on Monday.
The investments more than doubled in Q2, showcasing an impressive 122 percent increase compared to the prior quarter, according to the Vestian report.
Foreign investments dominated the investment landscape in Q2. Notably, a significant 69 percent of the funds from the US, Japan, and Hong Kong were directed towards commercial assets. In contrast, only 11 percent of the total investments were allocated to residential properties, with the remainder spread across diversified assets.
The proportion of co-investments nearly doubled, rising to 15 percent from 8 percent, with a slight increase of 2 percent in value.
This transition from direct investments to co-investments by foreign investors highlights a cautious stance, driven by a desire to minimize risks amid unpredictable demand influenced by geopolitical tensions and macroeconomic volatility, the report noted.
“Q2 2025 saw a robust recovery in institutional investments, propelled by a significant rebound in commercial real estate activities compared to the previous quarter. While total inflows were lower on an annual basis, the remarkable quarterly increase signifies renewed investor confidence underpinned by strong macroeconomic fundamentals and inherent demand,” stated Shrinivas Rao, FRICS, CEO of Vestian.
This positive growth trend is anticipated to persist as multiple rating agencies forecast economic growth exceeding 6 percent for FY 2026.
Furthermore, the recent decrease in the repo rate is expected to enhance positive sentiment by lowering borrowing expenses and facilitating improved credit access for the sector, Rao mentioned.
Domestic investors made up 19 percent of the total investments in Q2 2025, a decline from 21 percent during the same period last year. In value terms, domestic investments were recorded at $336 million.
Point of View
I believe this influx of foreign investment in Indian real estate reflects a cautious yet optimistic outlook from global investors. The significant share from countries like the US, Japan, and Hong Kong underscores the importance of India's economic stability and growth potential. Moving forward, it's crucial for domestic stakeholders to leverage this momentum and ensure sustainable development in the sector.
NationPress
30/08/2025
Frequently Asked Questions
What percentage of foreign investments in Indian real estate comes from the US, Japan, and Hong Kong?
Approximately 89% of the foreign investments in the Indian real estate sector come from the US, Japan, and Hong Kong.
How much did the Indian real estate sector attract in institutional investments during Q2 2025?
The Indian real estate sector attracted institutional investments totaling $1.80 billion in Q2 2025.
What are the main types of properties attracting foreign investments?
The majority of foreign investments, around 69%, were concentrated in commercial assets, while only 11% went to residential properties.
What growth rate is expected for the Indian economy in FY 2026?
Several rating agencies predict economic growth exceeding 6% during FY 2026.
How did domestic investments change in Q2 2025 compared to last year?
Domestic investments accounted for 19% of total investments in Q2 2025, down from 21% in the same period last year.
