The Indian real estate sector has witnessed an unprecedented surge in institutional capital, reaching a historic peak in 2025. According to a comprehensive report by leading property consultancy Colliers India, total institutional investments soared to $8.47 billion (approximately Rs 76,000 crore), marking a significant 29% year-on-year growth from the $6.56 billion recorded in 2024.
This record-breaking influx arrives against a backdrop of a resilient global economy navigating geopolitical tensions. Emerging signs of trade normalcy, despite ongoing tariff discussions, have combined with India's robust growth narrative to solidify its position as a premier destination for international capital across sectors, with real estate being a prime beneficiary.
Metro Magnets: Bengaluru and Mumbai Dominate Inflows
The investment landscape was notably dominated by two major metropolitan hubs. Bengaluru and Mumbai collectively attracted nearly half (47%) of all institutional investments during the year. Bengaluru led the pack with inflows of about $2.2 billion, followed closely by Mumbai at $1.8 billion.
Of the $4 billion channeled into these two cities, office assets accounted for a commanding 75% of the activity. This underscores the sustained confidence in India's commercial office market, particularly for Grade A spaces. Overall, five out of the seven major Indian cities tracked recorded a year-on-year increase in capital inflows.
Domestic Capital Emerges as the Primary Engine
A defining trend of 2025 was the ascendance of domestic institutional investors as the main force driving the market. Inflows from domestic sources more than doubled to $4.8 billion, constituting a substantial 57% of the total investment volume.
Colliers India highlighted that this robust growth in domestic participation reflects rising confidence among Indian institutional investors. This sentiment is bolstered by improving asset quality, stable returns, and greater transparency across the real estate market.
In contrast, foreign capital deployment moderated by 16% year-on-year to $3.7 billion. However, a notable recovery in cross-border investments during the final quarter points to a gradual improvement in global investor appetite for Indian assets.
Segment-Wise Breakdown and Future Outlook
The office segment continued to be the cornerstone of institutional interest, drawing $4.5 billion or 54% of the annual inflows. This figure nearly doubled from 2024 levels, fueled by strong uptake of premium office spaces. Remarkably, the final quarter alone contributed nearly two-thirds of the yearly office investments.
The residential sector followed, posting a 36% year-on-year growth to $1.6 billion, accounting for 18% of total investments. Analysts attribute this momentum to favourable demographics, rising incomes, and increased developer expansion into Tier II cities via joint-venture models, which are attracting both domestic and foreign capital.
Mixed-use developments, retail, and alternative assets like data centres and co-living spaces also saw healthy traction, collectively attracting about $1.5 billion. The appetite here is driven by portfolio diversification strategies and a focus on demand-led assets.
Looking ahead, institutional investments are projected to strengthen further. This optimism is supported by expanding domestic capital pools, a slowly improving global risk sentiment, and India's strong economic fundamentals. Badal Yagnik, CEO and MD of Colliers India, stated that core income-generating assets—particularly offices, industrial and logistics parks, and residential projects—will remain priority areas for investors in 2026.
The report also noted that with over 370 million sq ft of existing office stock having the potential for future Real Estate Investment Trusts (REITs), the market is poised for greater institutionalisation and consolidation, supported by cross-border capital in the coming years.
