Key Foreign Investors in Indian Real Estate

Foreign investments were heavily dominated by three countries: Singapore, the United States, and Canada, collectively contributing over 25% of the total equity inflows. Among them, Singapore emerged as the largest contributor with a 36% share of the foreign equity investments in 2024. The US followed with a 29% share, while Canada accounted for 22%. Additionally, investments from the UAE saw a notable rise when compared to the previous year.

Despite the influx of foreign capital, domestic investments continued to be the leading driver of growth, making up 70% of the total equity investment in 2024.

Market Dynamics and Investment Trends

The Indian real estate market in 2024 was characterized by a renewed focus on capital deployment, especially in built-up assets and the acquisition of land and development sites. Developers were the dominant force in the capital inflows, attracting 44% of the total equity investments. Institutional players followed closely with a 36% share, while corporations, REITs (Real Estate Investment Trusts), and other categories contributed smaller shares of 11%, 4%, and 5%, respectively.

Looking ahead to 2025, CBRE forecasts that investment activity will maintain its upward trajectory. The market is expected to see increased investments in built-up office assets and a robust pipeline of residential development projects. Furthermore, the rapid growth of e-commerce and quick commerce is likely to drive significant investments into warehousing infrastructure.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa at CBRE, commented, “We expect sustained momentum in investment activity, particularly in built-up office assets and residential development sites. The increasing focus on e-commerce and quick commerce is set to fuel strong growth in logistics and warehousing sectors, offering new opportunities for both developers and investors.”

Shifting Focus to Metros, Tier-I, and Tier-II Cities

India’s metros and tier-I cities will continue to dominate as the primary destinations for equity inflows. However, there is also a growing interest in tier-II cities, which are witnessing a surge in real estate development, driven by strong demand across multiple sectors. These include residential, mixed-use developments, industrial & logistics (I&L), retail, and hospitality.

Gaurav Kumar, Managing Director, Capital Markets and Land at CBRE India, stated, “We are poised to witness significant growth momentum in investment activity from both institutional investors and domestic developers. The surge in real estate development, combined with healthy demand for office, residential, mixed-use, and I&L spaces, is driving this trend. In addition, sectors such as retail and hospitality are expected to gain renewed attention as the market continues to evolve to meet changing consumer and business needs.”

In conclusion, the Indian real estate sector is poised for continued growth in 2025, driven by strong investment inflows, particularly in office, residential, and logistics spaces, as well as a growing interest in emerging locations. With a diversifying market landscape, developers and investors alike are finding new opportunities in this dynamic sector.

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Traditionally, Indian investments have been concentrated on illiquid assets such as real estate and gold. However, the demand for higher returns amid the struggle of public equity markets to generate significant returns is driving a shift towards more diverse and alternative assets. The report indicates that the growing wealth of HNIs and ultra-high-net-worth individuals (UHNIs) will play a major role in this shift, with their wealth forecasted to reach USD 2,000 billion by 2027, which will in turn fuel an increased appetite for differentiated investment products like AIFs.

The domestic alternative assets under management (AUM) currently stands at around USD 400 billion, and the report highlights a significant opportunity for growth within this sector. As middle-income families experience rising wealth, the demand for alternative investments is expected to continue growing, further strengthening the underlying asset base.

A favorable regulatory environment, strong corporate governance, and the expanding population of affluent investors provide structural tailwinds that are positioning India’s AIF market for rapid expansion. The report emphasizes that AIFs are outpacing traditional asset management firms, showcasing the potential for higher profitability and a premium in valuations within this evolving market.

This transformation is also a result of the growing demand for professionally managed wealth solutions. As more investors allocate larger portions of their portfolios to alternative assets, a paradigm shift is occurring in investment strategies. Factors such as regulatory reforms, increasing HNI wealth directed toward AIFs, and the emergence of new asset classes, including private credit and real assets, further illustrate this trend.

With the number of HNIs and UHNIs projected to double over the next five years, the assets under management (AUM) in wealth management are also expected to grow exponentially. Despite HNIs currently allocating only 7-8% of their wealth to AIFs, the share of AIFs in their managed portfolios is expected to double over the next decade, reaching 15%.

Overall, the confluence of these factors sets the stage for a thriving future for India’s alternative investment sector. This growth trajectory mirrors global trends, positioning India to become a significant player in the global AIF market in the coming years.

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