US, Japan, Hong Kong drive 89 pc of Q2 foreign inflows in Indian real estate

New Delhi, July 7 (IANS) Indian real estate sector received institutional investments of $1.80 billion in April-June period (Q2 2025), with investors from the US, Japan and Hong Kong contributing around 89 per cent to the foreign investments, according to a report on Monday.

Investments more than doubled in Q2, recording a sharp 122 per cent growth over the previous quarter, said the Vestian report.

Foreign investments dominated investment activities in Q2. Interestingly, majority of the investments from the US, Japan and Hong Kong, around 69 per cent, were concentrated in commercial assets. Residential properties received only 11 per cent of the total investments, whereas the rest were diverted towards diversified properties.

The share of co-investments almost doubled to 15 per cent from 8 per cent, registering a marginal hike of 2 per cent in terms of value.

The shift from direct investments to co-investments by foreign investors' underscores their cautious approach, driven by a desire to mitigate risks amidst uncertain demand due to geopolitical conflicts and macroeconomic instability, said the report.

“Institutional investments saw a strong recovery in Q2 2025, primarily fuelled by a sharp resurgence in commercial real estate activity compared to the previous quarter. While overall inflows remained lower on an annual basis, the substantial quarterly growth reflects renewed investor confidence supported by robust macroeconomic fundamentals and strong inherent demand,” said Shrinivas Rao, FRICS, CEO, Vestian.

This growth momentum is expected to continue as several rating agencies predict economic growth of more than 6 per cent during FY 2026.

Moreover, the recent reduction in the repo rate is expected to bolster positive sentiment by reducing borrowing costs and improving credit access for the sector, Rao mentioned.

Domestic investors accounted for 19 per cent of the total investments in Q2 2025, down from 21 per cent in the same period last year. In value terms, domestic investments stood at $336 million.

—IANS

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