Strategic View: Co-investment between foreign and domestic players in Indian real estate jumped to $726.58 million during July-September 2025, up 6.6 times from $109.76 million year-ago period. Foreign investors partnered with local expertise to mitigate risks amid global uncertainties, with co-investments comprising 41% of Q3 2025 institutional capital versus 15% in Q2. Direct foreign investment fell 68% while domestic investment more than doubled, reflecting strategic shift toward collaborative structures as risk management tool.
Full story: India’s real estate investment landscape in Q3 2025 revealed dramatic pivot toward co-investment structures as foreign capital sought local partnerships to navigate market complexities. According to real estate consultant Vestian, total institutional investments surged 83% to $1.76 billion during the quarter, but the composition shift tells the more compelling story. Foreign direct investment plummeted 68% to $140.69 million as geopolitical uncertainty, currency volatility, and regulatory complexity deterred unilateral deployments.
Simultaneously, co-investment structures where foreign and domestic players jointly capitalize transactions exploded to $726.58 million—demonstrating that foreign appetite for Indian real estate remains robust when structured through local partnerships. This structural evolution reflects sophisticated risk management by international institutional investors. India’s real estate markets offer compelling growth fundamentals—urbanization, economic expansion, logistics infrastructure buildout—but present execution challenges around land acquisition, regulatory approvals, construction management, and exit liquidity. Foreign investors increasingly recognize that local partners with government relationships, market intelligence, and operational capabilities dramatically improve risk-adjusted returns.
Co-investment structures enable foreign capital to access deal flow while domestic players contribute expertise and local credibility, creating alignment that pure debt or preferred equity structures cannot replicate. The 41% share of co-investments in Q3 2025 (up from 15% in Q2) signals this is becoming the dominant foreign entry strategy. Domestic players simultaneously ramped direct investment to $892.22 million—more than doubling from $414.55 million year-ago—indicating robust local capital formation and confidence. This created a virtuous cycle: domestic developers and platforms with strong track records attracted foreign co-investment partnerships, while foreign capital enabled larger, higher-quality developments that domestic players could not capitalize alone. Sectors benefiting most included logistics warehousing (e-commerce tailwinds), office developments in tier-one cities, and residential projects in high-growth metros. Vestian’s analysis emphasized that “foreign investors, while cautious due to global uncertainty, chose to invest in collaboration with local expertise.
” This collaboration takes multiple forms: joint ventures with domestic developers, club deals with Indian institutional investors, and platform investments in local operators. Looking forward, this trend appears structural rather than cyclical—foreign allocators have learned that co-investment frameworks provide downside protection through local expertise while maintaining upside participation in India’s growth. For Indian real estate, this evolution professionalizes capital structures and accelerates institutional-grade development aligned with global standards.
Summary: Foreign-domestic co-investment in Indian real estate surged 6.6x to $726.58 million in Q3 2025 as international capital sought local partnerships amid global uncertainty. The structural shift—with co-investments comprising 41% of institutional capital—demonstrates sophisticated risk mitigation while maintaining exposure to India’s compelling growth dynamics. This matters because collaborative investment structures are becoming the dominant foreign entry strategy for Indian real estate, professionalizing capital deployment and accelerating institutional-grade development across office, logistics, and residential sectors.
Source: Economic Times – Co-investment by foreign, local Cos in realty sector up over 6-fold, Business Standard – Co-investment in Indian realty surges over 6-fold in Sep quarter
