India’s real estate sector reported a strong overall performance in institutional investments during the third quarter of 2025 (Q3 2025), reaching a four-year high. However, this growth was overshadowed by a steep decline in foreign capital, according to a new report by Vestian.

Foreign investment accounted for only 8 per cent of total institutional inflows in Q3 2025 — the lowest annual share — reflecting persistent global economic uncertainty.

The value of foreign investments fell to $141 million, a sharp 88 per cent decline from the previous quarter (Q2 2025) and a 68 per cent drop compared with Q3 2024.

Despite this pullback, the overall sector remained resilient, attracting $1.76 billion in institutional investments, an 83 per cent year-on-year rise, driven by strong domestic participation and strategic co-investments.

India-focused investments surged to 51 per cent of total inflows, or $892 million, marking a 166 per cent quarterly and 115 per cent annual increase. Meanwhile, co-investments — joint funding between foreign and domestic players — climbed to 41 per cent ($727 million) from just 15 per cent in Q2 2025.

Shrinivas Rao, FRICS, CEO of Vestian, said, “While foreign investors are adopting a cautious stance due to global headwinds, the surge in domestic and co-investments reflects the growing confidence of Indian investors in the country’s long-term growth story.”

The commercial real estate segment remained dominant, capturing 79 per cent of total inflows, amounting to nearly $1.4 billion, representing a 104 per cent annual growth.

In contrast, the residential sector’s share dropped to 11 per cent ($192 million), showing a 49 per cent quarterly decline. The industrial and warehousing segment, though smaller at 5 per cent, registered a 168 per cent quarterly surge, driven by increased demand in logistics infrastructure.