Adobe StockMarket Radar India: Record Q3 Deals Meet a 'Make-or-Break' Housing Quarter
A surge in commercial investment, led by new REIT rules, faces off against critical affordability pressures in the residential market.
October 28, 2025Real Estate
Written by Jorge Aguinaga
In response, Reuters reports that regulators are doubling down on financial sector reforms. Both the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have announced measures to boost credit and anchor foreign participation.
This surge included USD 859 million in private equity across 12 deals and 21 M&A deals valued at USD 843 million. As sources noted, investor appetite remained strongly focused on income-generating commercial and retail assets.
On the residential side, Reuters reported the RBI has exempted the government-backed real estate rescue fund, SWAMIH, from its tightened rules for alternate investment funds (AIFs). This fund was set up to provide crucial debt financing for stalled affordable and mid-income housing projects.
This follows other large-scale investments from US tech giants including Amazon (USD 6.8 billion) and Microsoft (USD 3 billion).
However, as The Financial Times reported, this boom highlights growing ESG concerns as data centres place a significant strain on the grid and consume more water than they replenish. This is a serious problem for states like Andhra Pradesh, which is already prone to droughts.
Opportunities are present, driven by festive season demand, stable interest rates, and recent GST cuts on construction materials. However, significant challenges remain. Affordability pressures continue to stretch budgets in the mid and affordable segments.
Furthermore, the premium segment is under scrutiny, with a large pipeline of luxury projects and growing unsold inventory that could trigger price corrections if sales momentum slows.
Thanks for reading. We look forward to bringing you a new market radar next week!
Key Takeaways:
- Institutional investment in real estate hit a record USD 2.9 billion in Q3 2025, signaling deep confidence from investors who are primarily targeting income-generating commercial assets.
- The residential market is facing a critical 'make-or-break' fourth quarter where festive demand will be tested against significant affordability pressures and a large pipeline of unsold premium inventory.
- A major policy shift has reclassified REITs as an "equity" asset class. This removes the 10% cap for mutual funds, a move expected to significantly boost liquidity and broaden retail investor access.
The Macro View
India's broader economic momentum showed signs of slowing in October, as Bloomberg noted a flash survey by HSBC Holdings showed services losing pace and demand softening. This slowdown, coupled with foreign outflows of nearly USD 17 billion this year, has rattled markets.In response, Reuters reports that regulators are doubling down on financial sector reforms. Both the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have announced measures to boost credit and anchor foreign participation.
Trend Spotlight
Record quarter for institutional investment despite macro headwinds
India's real estate sector saw its highest-ever level of institutional investment in the third quarter of 2025, according to Grant Thornton Bharat data, with a record 42 transactions valued at a total of USD 2.9 billion.This surge included USD 859 million in private equity across 12 deals and 21 M&A deals valued at USD 843 million. As sources noted, investor appetite remained strongly focused on income-generating commercial and retail assets.
Policy shifts boost REITs and housing
Regulatory changes are providing significant tailwinds. In a major shift, REITs (Real Estate Investment Trusts) have been reclassified from a "hybrid" to an "equity" asset class. This move eliminates the previous 10% investment cap for mutual funds, a change expected to significantly improve liquidity and broaden access for retail investors.On the residential side, Reuters reported the RBI has exempted the government-backed real estate rescue fund, SWAMIH, from its tightened rules for alternate investment funds (AIFs). This fund was set up to provide crucial debt financing for stalled affordable and mid-income housing projects.
Data centre boom vs. ESG concerns
A new wave of investment is targeting AI infrastructure, led by Google's USD 15 billion, five-year plan to build an AI data centre in Visakhapatnam.This follows other large-scale investments from US tech giants including Amazon (USD 6.8 billion) and Microsoft (USD 3 billion).
However, as The Financial Times reported, this boom highlights growing ESG concerns as data centres place a significant strain on the grid and consume more water than they replenish. This is a serious problem for states like Andhra Pradesh, which is already prone to droughts.
A "make-or-break" residential quarter
Following a mixed performance in Q3, Fortune India reports the final quarter of 2025 is poised to be a decisive period for India's residential market.Opportunities are present, driven by festive season demand, stable interest rates, and recent GST cuts on construction materials. However, significant challenges remain. Affordability pressures continue to stretch budgets in the mid and affordable segments.
Furthermore, the premium segment is under scrutiny, with a large pipeline of luxury projects and growing unsold inventory that could trigger price corrections if sales momentum slows.
Thanks for reading. We look forward to bringing you a new market radar next week!