Foreign investment in Indian real estate declined by 16% in 2025 to about $3.65 billion, even as overall institutional investment activity strengthened, according to a report released by Colliers on January 6. Total institutional investments rose 29% year on year to $8.47 billion, supported largely by strong domestic capital participation despite continued global uncertainty.
Office assets remained the most attractive segment for investors, accounting for 54% of total inflows during the year. Residential, followed by industrial and warehousing assets, also drew significant interest. Bengaluru and Mumbai emerged as the top investment destinations, together accounting for nearly half of total capital inflows, driven mainly by large office transactions. Bengaluru attracted around $2.2 billion, while Mumbai recorded inflows of approximately $1.8 billion, Colliers India said.
Domestic institutional investors played a leading role in 2025, with capital inflows more than doubling year on year to $4.8 billion. This represented 57% of total real estate investments during the year. According to the report, the surge in domestic participation reflects growing confidence among Indian institutions, supported by improving asset quality, stable returns, and increased transparency across the market.
In contrast, foreign capital deployment moderated, falling 16% year on year to around $3.7 billion. However, Colliers noted that cross-border investments showed signs of revival in the final quarter of the year, suggesting a gradual improvement in global investor sentiment.
Looking ahead, institutional investment activity is expected to gain further momentum, supported by expanding domestic capital, improving global risk appetite, and India’s strong economic fundamentals. Badal Yagnik, Chief Executive Officer and Managing Director of Colliers India, said core income-generating assets—particularly offices, industrial and logistics parks, and residential properties—are likely to remain key focus areas for investors in 2026.
Bengaluru and Mumbai lead investment inflows
Bengaluru and Mumbai together accounted for close to half of total real estate investments in 2025, largely due to major office deals. Of the combined $4.0 billion invested in these two cities, office assets contributed nearly three-fourths of the total activity. The report also highlighted that five of the seven major Indian cities recorded year-on-year growth in capital inflows during the year.
In addition, multi-city investments totalled about $2.3 billion in 2025, with more than 40% directed toward residential assets. This trend reflects rising investor interest in early-stage residential developments and expansion into newer markets, including emerging Tier II and Tier III cities.
Office segment dominates investment activity
The office segment attracted $4.5 billion in investments during 2025, almost double the amount recorded in 2024. This growth was driven by increased participation from both domestic and foreign investors. Notably, nearly two-thirds of the annual capital deployment occurred in the final quarter, coinciding with strong demand for Grade A office space across major markets, according to Colliers.
The residential segment ranked second, drawing $1.6 billion in investments, a 36% increase year on year and an 18% share of total inflows. The report attributed this growth to strong long-term demand fundamentals, including favourable demographics, rising incomes, and increasing developer expansion into Tier II cities through joint ventures, which continue to attract both domestic and foreign capital.
Mixed-use, retail, and alternative asset classes also gained traction, together accounting for nearly $1.5 billion, or about 17% of total investments in 2025. Investor interest in these segments has been supported by diversification strategies and growing demand for assets such as data centres, co-living developments and second homes.
Commenting on the office sector, Vimal Nadar, National Director and Head of Research at Colliers India, said the Indian office market reached new highs in 2025, with a record $4.5 billion in institutional investments. He noted that the year also saw the listing of a fourth office-focused REIT and significant acquisitions by existing REITs, supported by strong tenant quality, high occupancy levels, and robust rental growth.
Nadar added that with more than 370 million square feet of existing office stock potentially eligible for future REIT listings, the market is likely to see greater institutionalisation and consolidation in the coming years, supported by cross-border capital flows.
