H1 2025 - Short term moderation, long term momentum
Real estate capital markets continue to demonstrate underlying strength despite H1 2025 experiencing a 37% year-over-year adjustment in investment volumes. While global economic challenges and political uncertainties have extended transaction timelines, this recalibration represents a natural response to market conditions rather than structural weakness. Investors remain strategically engaged, carefully timing their capital deployment as they navigate the current environment. Beneath these short-term fluctuations lies a fundamentally sound market, with investor confidence remaining strong as evidenced by a substantial pipeline exceeding USD 1 billion in transactions currently progressing through due diligence or advanced negotiations. This robust deal flow signals that capital remains poised to deploy when conditions stabilize, underscoring the market's underlying strength despite the current pause. Following an extraordinary 2024 that outpaced investment records, the real estate market has consistently demonstrated its staying power with annual investments surpassing the USD 5 billion threshold across the previous five years. When analyzing historical investment patterns and current global economic conditions, we anticipate that capital flows for calendar year 2025 will align with these established benchmarks. The market's ongoing maturity is simultaneously creating compelling opportunities in alternative and emerging asset classes, potentially diversifying investment flows and strengthening the overall market ecosystem.
Key highlights from the report:
- Institutional investments reached USD 3081 million across 31 deals in H1 2025, reflecting a 37% year-on-year decline. Investment decision-making cycles have lengthened as market participants navigate complex global economic headwinds and geopolitical ambiguities.
- Foreign institutional investors remain the largest contributors at 68% share of the total investments.
- While foreign institutional capital continues to dominate, domestic institutional participation has surged remarkably since 2023, capturing a 32% market share in H1 2025.
- Together, these complementary investment trends signal a maturing Indian real estate market with broadening institutional appeal.
- In the past, the Americas has consistently been the highest contributors to investments. However, since 2023, there has been a decline in the share of investments from institutions domiciled in the USA and Canada. H1 2025 witnessed APAC leading with a 37% share.
- Equity investments remain the dominant route for investments in the real estate sector, comprising a 78% share of the total investments.
- Residential sector leads marginally at 38% share of the total capital flow, marking a notable shift from the historical preference for office sector. Combined, these two sectors constitute an overwhelming 75% of total capital deployed during this six-month period.
- Mumbai MMR and Bengaluru collectively attracted 54% of the total real estate investments during the first half of 2025, establishing themselves as the dominant investment destinations in the country.
For more insights, read the full report.