Private equity (PE) investment inflows into the Indian real estate sector rose by 35 per cent to $748 million (Rs 6,400 crore) during the January-March quarter of 2025 from $554 million in the same period of last year. With the Reserve Bank of India (RBI) slashing the repo rate by another 25 basis points (bps) to 6 per cent on Wednesday, the realty sector is expected to receive a boost since investments and demand are set to rise further amid a decline in interest rates, industry officials said.
Residential assets led the market, accounting for approximately 51 per cent of the total investment volume, according to the latest data released by Savills India, a global consulting firm. The majority of this capital was directed toward Bengaluru, Mumbai, Pune and Delhi-NCR, underlining the continued momentum and demand in key Tier I cities.
The commercial office segment emerged as the second-highest contributor, securing a 32 per cent share of total investments. This segment saw inflows exclusively from foreign investors, with funds primarily directed toward development assets in Bengaluru and land in Mumbai, it said.
What RBI rate cut means for realty sector
Sanjay Daga, CEO and managing director, Anex Advisory, said “real estate sales have been slow to rebound, and a rate cut could have provided the much-needed momentum. I believe a further reduction in interest rates will serve as a significant catalyst for demand and investment — particularly as investors look for safer havens amid the ongoing turmoil in the stock market.”
“While 2024 had shown some improvement in PE inflows, Q1 of 2025 has demonstrated a clear surge with 35 per cent YOY growth. Notably, it is also a 230 per cent sequential rise over the previous quarter. The residential segment, attracting 51 per cent of the quarterly pie, underscores strong confidence in the future of this segment of the market. Additionally, the APAC regional inflow accounted for 53 per cent of foreign funding in this period, a prominent indication of Asian investors’ strong interest” said Arvind Nandan, managing director, research & consulting, Savills India.
Aman Trehan, executive director, Trehan Iris, says, “lower borrowing costs are anticipated to make home loans more affordable, thereby enhancing the purchasing power of potential homebuyers and stimulating demand across various housing segments. Additionally, the reduction in interest rates is likely to ease financial constraints for developers, facilitating the timely completion of ongoing projects and encouraging the initiation of new developments.”
The anticipated decrease in home loan interest rates is expected to bolster consumer confidence, encouraging prospective buyers to invest in their dream homes, said Ashish Sharma, AVP Operations, Brahma Group. Furthermore, the RBI’s projection of a 6.5 per cent GDP growth for 2025-26 reflects a positive economic outlook, which is likely to invigorate the real estate sector, he said.
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Parthh K. Mehta, CMD, Paradigm Realty, said, “overall, inflation is under control, and the RBI has shifted the policy stance to ‘accommodative’ from ‘neutral’, which means there will be more elbow room for rate cuts in the future. This is a promising development for the real estate sector as it will help boost demand by incentivising home-buyers.”