1 week ago
Global Investors Rethink Their India Real Estate Bet
Foreign investors are putting less money into Indian real estate than they did a few years ago.
Investment fell from Rs 6,043 crore in FY21 to Rs 2,208 crore in FY26.
Experts say higher interest rates and wars have made some developed countries seem safer and more attractive.
Investors also worry that changes in the value of the Indian rupee could reduce their returns.
Indian property can offer yields of 6.5% to 7%, but currency losses may lower the final gain.
At the same time, some large investors are becoming more comfortable funding new construction projects.
Blackstone, for example, has invested in warehouses, data centres and residential development in India.
Indian investors are helping fill the gap, although experts say they have not replaced all the overseas money.
Foreign real estate inflows into India fell to Rs 2,208 crore in FY26 from a peak of Rs 6,043 crore in FY21.
FY26 inflows were 29% lower than the Rs 3,098 crore recorded in FY25.
Higher global interest rates, tighter financial conditions, geopolitical uncertainty and currency risks reduced India’s appeal.
Global investors are increasingly willing to fund greenfield development, including warehouses and data centres, rather than only completed properties.
Domestic institutions, developers, family offices and high-net-worth investors are becoming more active, but have not fully replaced foreign capital.
- Who
- Foreign investors, domestic investors and major firms including Blackstone are involved; analysts Shobhit Agarwal and Vivek Rathi assessed the trend.
- What
- Foreign capital inflows into Indian real estate have fallen sharply, while the mix of investment is shifting toward development projects.
- Where
- India, with comparisons involving developed markets such as the United States.
- When
- Inflows peaked in FY21, fell in FY25, and declined further to Rs 2,208 crore in FY26.
- Why
- Higher interest rates, geopolitical uncertainty, tighter financial conditions and currency risks have made Indian property less attractive to some overseas investors.
Shift Indicates Greater Confidence
Returns Remain Relatively Unattractive
Development risk
Shift Indicates Greater Confidence
Shobhit Agarwal said global investors are increasingly willing to take development risk in India, instead of focusing only on completed assets.
Returns Remain Relatively Unattractive
The earlier preference for completed assets reflects the caution investors have traditionally shown toward development risk.
Role of domestic capital
Shift Indicates Greater Confidence
Domestic institutions, developers, family offices and high-net-worth investors are becoming more active and are capturing opportunities previously dependent on overseas capital.
Returns Remain Relatively Unattractive
Vivek Rathi said domestic and Asian investors have not fully compensated for the decline in foreign investment.
Investment returns
Shift Indicates Greater Confidence
Indian assets offer yields of 6.5%-7%, and returns could improve if source-market interest rates fall or investment-market returns rise.
Returns Remain Relatively Unattractive
Rathi said currency losses can reduce a 6.5% yield to about 3%; even hedged returns of 5%-6% could be similar to US returns without comparable currency or developing-country risks.
Key facts
- FY21 peak inflows
- Rs 6,043 crore
- FY25 inflows
- Rs 3,098 crore
- FY26 inflows
- Rs 2,208 crore
- FY26 annual decline
- 29% from FY25
- Reported Indian asset yields
- 6.5%-7%
- Blackstone warehousing portfolio
- Horizon Industrial Parks has around 28.5 million square feet of operational warehousing space.
- Horizon annual development
- About 5-6 million square feet of warehousing space each year
- Blackstone stake
- A 40% stake in Pune-based Kolte-Patil Developers
Quotes
Shobhit Agarwal
Chief executive, Anarock Capital
“Foreign capital inflows into Indian real estate have plunged to nearly a third of their peak in financial year 2020‑21, as higher global interest rates, tighter financial conditions and geopolitical uncertainty have weakened the appeal of Indian property to overseas investors.”
financialexpress.com
“It was expected that rates would come down there, but war and inflation kept rates high. With high cost of money, investors felt developed markets were safe bets and attractive.”
financialexpress.com
Sources
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