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Institutional investments in Indian real estate grew by 61% in 2024, reaching USD 6.8 billion, according to real estate consultant Vestian. This was a strong recovery compared to USD 4.3 billion in 2023 and even surpassed pre-pandemic levels, despite a slow start to the year.

Shrinivas Rao, CEO of Vestian, said that while 2024 saw significant growth, 2025 could be a tough year due to global challenges. Factors like geopolitical tensions, a slowing world economy, and high inflation are expected to make it harder to attract investments.

The residential sector attracted USD 2 billion, accounting for 30% of the total investments. Housing investments saw a massive 171% jump compared to the previous year. Commercial real estate, including offices, retail spaces, co-working areas, and hotels, received 35% of the total investment. Industrial and warehousing parks made up 28%.

Foreign investors led the way, contributing 54% of the total investments, while domestic funds accounted for 30%. The remaining 16% came from co-investments, where foreign investors partnered with local players to navigate uncertain market conditions. Vestian noted that co-investments became more popular in 2024 as international investors valued local expertise.

Rao added that a potential reduction in the RBI’s repo rate in 2025 could boost real estate investments. Lower mortgage rates might drive more activity in the market, making it more attractive for institutional investors.

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Vestian, a US-based real estate consultancy, operates in countries including India, China, the UK, Sri Lanka, and the Middle East.

In summary, while 2024 was a strong year for Indian real estate investments, 2025 may bring new challenges. However, changes in interest rates and market conditions could create opportunities for further growth.