Core assets drive $1.3b Indian realty investments in Q1 of 2025

Core assets drive Indian realty $1.3 billion investments in Q1 Institutional investments in Indian real estate have seen a strong start to 2025, with inflows reaching $1.3 billion in the first quarter—a 31% year-on-year (YoY) increase.

This growth was primarily driven by domestic investments, which accounted for 60% of the total inflows during the quarter. With $0.8 billion inflows, domestic investments saw a 75% annual rise and were largely focused on industrial & warehousing and office segments, according to Colliers survey.

Office segment drove one-third of the institutional inflows during the first quarter of 2025, at $0.4 billion worth of investments. Hyderabad attracted over half of the total inflows in the office segment in Q1 2025. At the India level, industrial & warehousing and residential segments too witnessed significant traction, cumulatively accounting for 47% of the total inflows during Q1 2025.

“Institutional investors in Indian real estate continue to exhibit confidence, as investments rose by 31% YoY to $1.3 billion in Q1 2025. This growth highlights the resilience of the Indian real estate and the untapped opportunities it presents. Both foreign and domestic investors remained committed towards core assets, with office, residential and industrial & warehousing segments cumulatively accounting for 80% of the institutional investments in Q1 2025. The momentum is expected to persist through 2025, supported by strong economic growth prospects, robust demand across asset classes and optimistic business sentiment. Anticipated easing of monetary policy in the near future and proactive government policies are likely to ensure capital deployment in both core and alternative real estate assets throughout the year,” said Badal Yagnik, Chief Executive Officer, Colliers India.

Residential investments surge in Q1 2025 During Q1 2025, institutional investments in the residential segment was almost thrice the inflows in the corresponding period of 2024. The segment with $ 0.3 billion inflows, accounted for 23% of the total quarterly investments, almost at par with the inflows in industrial & warehousing segment. Interestingly, foreign investments accounted for over half of the total inflows in residential segment during the quarter, led by select large deals.

“Amidst evolving capital deployment trends, leading global investors are increasingly partnering with domestic developers, forming joint venture platforms to capitalise on growing opportunities in the residential segment. Sustained growth in residential prices, rising demand for luxury housing, and ongoing infrastructure developments will continue to boost institutional investments in residential real estate in the upcoming quarters. Concurrently, likely reduction in repo rates can potentially fuel residential demand and thereby investments in mid & affordable housing as well,” said Vimal Nadar, Senior Director & Head of Research, Colliers India.

In continuation to the growth momentum set in 2024, the industrial & warehousing segment also saw over US$ 0.3 billion of investments in Q1 2025, a notable 73% YoY increase. Improved investor confidence is reiterated by strong performance of high frequency macro-economic indicators including Manufacturing Purchasing Manager’s Index (PMI) and Index of Industrial Production (IIP). India’s Manufacturing PMI touched 58.1 in March 2025, the highest since mid-2024 indicating strong expansion in the manufacturing sector, driven by robust demand, increased production output, and improved business confidence.

Investments in alternate assets remained healthy at US$ 0.07 billion during the quarter. Amongst alternate assets, data centers particularly witnessed strong traction in Q1 2025, led by capital deployment in a proposed hyperscale data centre in Mumbai.

I got a new flat in exchange for an old due to redevelopment of our complex in Pune. Would it attract tax? Subhash Nair, Sharjah.

The Income-tax appellate tribunal (ITAT) has recently held that the value of a new flat received in a redevelopment project cannot be taxed as ‘income from other sources’ under Section 56(2)(x) of the Income-tax Act. This is not a case of receipt of immovable property for inadequate consideration. Instead, it is a legitimate transaction involving the replacement of an existing asset with a new one, the tribunal held.

Can foreigners of non-Indian origin invest in real estate in India? Our employer has opened a liaison office in India and employed foreign expatriates and some of them are planning to invest in Indian real estate? Yogesh Raval, Dubai.

A foreign national who is a ‘person resident in India’ within the meaning of Section 2(v) of FEMA, 1999 can purchase immovable property in India, but the person concerned would have to obtain the appro`vals and fulfill the requirements, if any, prescribed by other authorities, such as, the state government concerned, etc. A foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank.