Indian realty drives $1.4 billion domestic investment in first half

After a steady start in the first quarter, institutional investments in Indian real estate witnessed a notable uptick during the second quarter at $1.7 billion, a 29 per cent rise on a sequential basis.

This mopped-up total investments in the first half of 2025 to $3.0 billion, reinforces the sector’s resilience amidst ongoing global uncertainties.

Although this marked a 15 per cent decline compared to H1 2024, the investment volume remained above the half-yearly average of about $2.6 billion since 2021, reflecting sustained investor interest, according to Colliers survey.

While foreign investments saw a 39 per cent YoY decline, domestic capital surged by 53 per cent to $1.4 billion, accounting for 48 per cent of the total inflows in first half.  The growing share of domestic investments marks an ongoing shift in the capital investment landscape, with Indian institutional investors playing a more prominent role in driving real estate activity across core asset classes.

“Domestic capital has emerged as a key driver in India’s real estate investments, with its share in total investments rising steadily from 16 per cent in 2021 to 34 per cent in 2024.

In H1, 2025, domestic investments accounted for 48 per cent of the total inflows, surging by 53 per cent compared to H1 2024. Their growing dominance has helped cushion the impact of global uncertainties and push total investments to the $3.0 billion mark.  Over 60 per cent of domestic investments during H1 were directed towards residential and office assets, reflecting sustained confidence in core segments.”

“As domestic capital deepens and diversifies, it is poised to bring greater stability and long-term confidence to India’s maturing real estate ecosystem,” said Badal Yagnik, Chief Executive Officer, Colliers India.

Foreign institutional investments dropped 39 per cent YoY in first half to $1.6 billion, as global investors remained cautious amidst evolving macroeconomic scenario, flow of credit and inflationary pressures.

Despite the slowdown, foreign capital still accounted for over half of total inflows, with growing interest in mixed-use and retail assets. Both these segments together comprised about 55 per cent of foreign investments during first half (H1) of 2025.

Residential assets saw $0.8 billion of investments, driving 27 per cent of the inflows during H1 2025, followed by office assets, at 24 per cent share. Investments in mixed-use assets too witnessed a significant surge, accounting for more than 20 per cent share in the total inflows during H1, up from 7 per cent share during the corresponding period in 2024.

Retail and alternative assets too saw a notable rise in investment inflows, cumulatively accounting for $0.5 billion, led by select large deals in H1 2025.

“The $1.7 billion of investments recorded in Q2 2025 underscores the resilience of India’s real estate sector, with both core and emerging segments attracting sustained interest. The residential segment continued its strong run, accounting for 31 per cent of quarterly investments, driven by healthy end-user demand, improved affordability, and renewed confidence from institutional investors.

The retail sector is also witnessing a steady revival, backed by rising consumption, rapid urbanisation, and evolving consumer lifestyle and spending patterns.  With REITs and other institutional players actively scouting for quality retail assets across key markets, investment activity in this segment is expected to gain further traction in the coming quarters,” said Vimal Nadar, National Director & Head of Research, Colliers India.

Mumbai drove 22 per cent of the total investments during H1, led by select deals in office assets. Bengaluru attracted $0.5 billion investments during H1, contributing nearly 17 per cent to the total inflows.

Office and residential assets together made up 57 per cent of the city’s investment share. Interestingly, select large deal in retail segment in Kolkata, resulted in 13 per cent share in total investments by the city during first half.

While reinvesting capital gains, is indexation benefit advantageous? Can we invest capital gains in commercial property? Parivesh Bohra, Sharjah.

The capital gains are taxed either at 12.5 per cent without indexation or 20 per cent with indexation, whichever is more beneficial.

In case of long-term appreciation, indexation often lowers tax liability, making the 20 per cent route preferable. It should be noted that if indexation does not significantly increase cost base, then 12.5 per cent flat rate would be ideal and tax-efficient. Investment in commercial property do not qualify.

Is a loan available for NRIs to invest in land in India? Can we repatriate the sale proceeds if we sell the land at a later date? Please clarify. Haresh Bhatia, Dubai.

Loans for investment in vacant plots are available for NRIs on similar interest rates offered to resident Indians.

The loan amount depends on the value of the property from 75 per cent to 90 per cent.

The maximum repayment period is 15 years. While computing the land value, the lender may take the guideline value of the property and not the market value.  You can’t sell land and repatriate the sale proceeds but you can build house on it and then sell and repatriate the sale proceeds including the value of the land.