Adobe StockMarket Radar India: Domestic Investors Power IPO Boom and Reshape Real Estate
Low inflation and a blockbuster IPO month highlight surging domestic confidence, while the RE sector sees a strategic shift
October 14, 2025Real Estate
Written by Jorge Aguinaga
The Indian economy is showing strong momentum, buoyed by positive domestic indicators. Inflation eased to 1.54% in September, marking the second time this year it has fallen below the central bank’s target range.
This slowdown in price gains, the slowest in eight years, strengthens the case for the Reserve Bank of India to consider an interest rate cut at its upcoming December meeting.
Economic fundamentals are further supported by robust government CapEx, which is projected to remain strong at around 5% of GDP for FY26, signalling a continued focus on investment and growth.
This positive sentiment is also reflected in the nation's equity markets, which have recovered from earlier turbulence. India is poised for a "blockbuster" month of initial public offerings (IPOs), with analysts forecasting approximately USD 5 billion in listings for October alone.
The IPO pipeline is the most active it has been, with activity on track to surpass last year's record of USD 21bn.
This surge is largely powered by domestic investors, who have poured a net USD 63.2 billion into the market so far this year. Mutual funds, in particular, have become a popular channel for retail investors, providing strong support for the fundraising boom.
While this technically represents a modest 9% year-on-year decline, investment volumes remain above the five-year average, underscoring investor confidence in the market's fundamentals.
The most notable trend is the growing prominence of domestic capital. While foreign investments moderated, domestic institutional capital surged by 52% year-on-year to USD 2.2 billion, accounting for over half of the total inflows in the first nine months of the year.
This highlights a maturing market in which Indian investors are increasingly significant participants.
Sector-wise, office assets retained their leading position, attracting USD 1.5 billion in the first three quarters of 2025 - representing 35% of the total inflow.
However, with the supply of investible core office assets becoming constrained, investors are adopting more opportunistic strategies. This has steered capital towards greenfield developments and alternative asset classes.
Data centres in particular have emerged as a major focus, drawing 38% of total PE inflows in Q3, second only to offices, driven by the ever-growing demand for AI and cloud infrastructure.
The residential segment also saw a notable 11% YoY increase in investments, reaching USD1.1 billion. Geographically, Mumbai led capital inflows, followed by Bangalore and Pune.
As India's real estate sector adapts to new dynamics, the growing dominance of domestic capital, coupled with a shift toward diversification into data centres and greenfield developments, signals a transformation that looks set to shape the future of the market and open up new avenues for investment.
Look out for a new edition of the GRI Institute's Market Radar India next week!
The Indian economy is showing strong momentum, buoyed by positive domestic indicators. Inflation eased to 1.54% in September, marking the second time this year it has fallen below the central bank’s target range.
This slowdown in price gains, the slowest in eight years, strengthens the case for the Reserve Bank of India to consider an interest rate cut at its upcoming December meeting.
Economic fundamentals are further supported by robust government CapEx, which is projected to remain strong at around 5% of GDP for FY26, signalling a continued focus on investment and growth.
This positive sentiment is also reflected in the nation's equity markets, which have recovered from earlier turbulence. India is poised for a "blockbuster" month of initial public offerings (IPOs), with analysts forecasting approximately USD 5 billion in listings for October alone.
The IPO pipeline is the most active it has been, with activity on track to surpass last year's record of USD 21bn.
This surge is largely powered by domestic investors, who have poured a net USD 63.2 billion into the market so far this year. Mutual funds, in particular, have become a popular channel for retail investors, providing strong support for the fundraising boom.
Trend Spotlight
The real estate sector, a critical engine for India’s economic ambitions, is undergoing a significant structural transformation, with institutional investments in the sector reaching USD 4.3 billion during the first nine months of 2025.While this technically represents a modest 9% year-on-year decline, investment volumes remain above the five-year average, underscoring investor confidence in the market's fundamentals.
The most notable trend is the growing prominence of domestic capital. While foreign investments moderated, domestic institutional capital surged by 52% year-on-year to USD 2.2 billion, accounting for over half of the total inflows in the first nine months of the year.
This highlights a maturing market in which Indian investors are increasingly significant participants.
Sector-wise, office assets retained their leading position, attracting USD 1.5 billion in the first three quarters of 2025 - representing 35% of the total inflow.
However, with the supply of investible core office assets becoming constrained, investors are adopting more opportunistic strategies. This has steered capital towards greenfield developments and alternative asset classes.
Data centres in particular have emerged as a major focus, drawing 38% of total PE inflows in Q3, second only to offices, driven by the ever-growing demand for AI and cloud infrastructure.
The residential segment also saw a notable 11% YoY increase in investments, reaching USD1.1 billion. Geographically, Mumbai led capital inflows, followed by Bangalore and Pune.
As India's real estate sector adapts to new dynamics, the growing dominance of domestic capital, coupled with a shift toward diversification into data centres and greenfield developments, signals a transformation that looks set to shape the future of the market and open up new avenues for investment.
Look out for a new edition of the GRI Institute's Market Radar India next week!