The Indian real estate market continues to thrive, attracting billions in investments across various sectors. According to CBRE’s latest report, the sector—comprising residential, office, retail, and logistics—saw equity investments totaling $11.4 billion in 2024, with expectations that this figure could rise to between $10 billion and $15 billion in 2025. This surge in investments is primarily concentrated in the Mumbai Metropolitan Region, National Capital Region, and Bengaluru, which continue to be the top-performing markets in India.

Despite global uncertainties, including the reciprocal tariffs imposed by the US and fluctuating geopolitical dynamics, the Indian real estate sector has shown underlying strength, with the capital inflows largely dependent on the viability of the sector and the ongoing supply chain realignments due to shifting global trade policies. Rami Kaushal, Managing Director for Consulting and Valuation Services at CBRE, mentioned that the ongoing negotiations with the US could significantly influence the sector's outlook. If India emerges as a beneficiary of the China-plus-one strategy, its position in global markets could strengthen, offering an attractive environment for continued real estate investments.

Impact of Global Tariffs on Real Estate and Capital Flows

The international trade environment, particularly the US tariffs imposed on India, could significantly affect how capital inflows behave within the real estate market. As Kaushal mentioned, tariff impositions could lead to a realignment of supply chains, which could either benefit or challenge India’s logistics and industrial demand. In the case of the China-plus-one strategy being successful, India could see a boost in manufacturing activity, which in turn would drive logistics demand and related real estate requirements, especially for warehouses, offices, and retail spaces.

The outcome of the US tariffs remains uncertain, and until the final results of the ongoing negotiations are revealed, the sector remains in a state of flux. Nevertheless, India’s appetite for real estate projects and the growing demand for residential and commercial properties indicates that investment will continue flowing, as long as the market remains viable and robust.

Key Findings from CBRE Report on Land Acquisition and Real Estate Investments

The CBRE report also highlighted significant activities in land acquisition across India. Developers have invested nearly $12 billion between 2022 and 2024 in acquiring over 7,000 acres of land, which indicates a strong pipeline of future projects. This land acquisition spree is particularly prominent in greenfield developments, ensuring that the residential sector remains a major focus area for expansion. The move is expected to sustain growth, especially in major cities like Mumbai, Delhi NCR, and Bengaluru, where demand for housing continues to rise.

Alongside land acquisitions, developers and asset managers raised substantial capital from equity markets, with over Rs 24,000 crore raised through avenues like QIPs, IPOs, and the introduction of SM REITs. This financial support has been pivotal for funding expansion and business development initiatives, enabling developers to continue scaling their operations.

Credit Access Challenges for Non-Grade A Developers

While the real estate market is booming, there are challenges that developers face, particularly those in the non-Grade A segment. One major hurdle remains access to affordable credit. Non-Grade A developers struggle to secure construction finance due to issues with collateral and perceived risk, making it harder for them to compete with Grade A developers.

Grade A developers, on the other hand, can access construction finance at interest rates between 8.5% to 9%, which helps them continue operations without significant financial strain. However, non-Grade A developers find themselves at a disadvantage in terms of both credit availability and risk perceptions.

To overcome these challenges, many developers are increasingly looking towards private credit sources, including alternative investment funds (AIFs), which offer financing through measures like lease rent discounting (LRD), where rent receipts are used as collateral. This financing option is proving to be crucial for developers looking to fund residential and commercial projects while navigating the challenges of limited access to traditional loans.

Conclusion: A Positive Outlook Amid Challenges

Overall, India’s real estate sector continues to exhibit a strong growth trajectory, with significant investments flowing into various markets and asset classes. The rise in capital inflows, particularly from private equity, reflects the underlying strength of the sector, even as global uncertainties surrounding US tariffs and international trade policies create a fluid environment.

Key cities such as Mumbai, Delhi NCR, and Bengaluru remain central to India’s real estate investment landscape, and with ongoing projects in greenfield developments, the market is well-positioned for future expansion. However, for non-Grade A developers, the road to obtaining affordable credit remains a challenge, highlighting the need for alternative financing solutions to bridge the gap.

The outlook for India’s real estate market remains optimistic, with investors and developers continuing to keep an eye on the global trade landscape, particularly the impact of tariffs and manufacturing shifts in the region. India’s real estate future remains promising, with capital flows likely to keep rising if economic conditions remain favorable.

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