Private equity (PE) investments in Indian real estate experienced a 15% decline during July-September, falling to USD 819 million amidst global economic uncertainties, according to a recent report by Anarock, a property consultant. This represents a decrease from the USD 967 million recorded during the same period last year.
The data, released by Anarock Capital, the consultant's arm, further reveals that PE investments in the Indian real estate sector have decreased by 15% to USD 2.2 billion during the first half of the fiscal year 2025-26 (April-September), compared to USD 2.6 billion in the corresponding period of the previous fiscal year. Despite this overall decrease, foreign capital continues to hold a significant share, accounting for 73% of the total investments during the first half of the fiscal year.
Shobhit Agarwal, CEO of Anarock Capital, noted a decline in PE activity from a high of USD 6.4 billion in FY21 to USD 3.7 billion in FY25. He pointed out that strong real estate sales volumes, particularly in the residential segment, have significantly improved developers' cash flows, reducing their reliance on expensive Alternative Investment Funds (AIFs). Additionally, banks are now better capitalized and more willing to lend to real estate projects due to improved business dynamics.
Agarwal also addressed the uncertainty in the commercial real estate sector, attributing it to factors such as the Russia-Ukraine war, rising inflation, and other global macroeconomic uncertainties. These factors have negatively impacted global funding flows. However, Agarwal views this as a temporary setback, emphasizing India's strong growth potential and its attractiveness as an investment destination. He anticipates a resurgence in PE fund flows to commercial real estate once these uncertainties subside and greater clarity emerges.
The report also highlighted that the industrial and logistics segment did not receive any PE investment during the first six months of the current fiscal year. Furthermore, office complexes experienced a steep decline in investment to USD 806 million in FY25 from USD 2.2 billion in FY24. According to Anarock, investor caution persists due to high interest rates and geopolitical stress, despite robust leasing activity. On the other hand, PE investments in warehousing assets increased sharply, compensating for the decline in inflow in housing and office properties. In FY25, hybrid deals surged to 42% of total PE inflow, while equity and debt investments dropped to 37% and 21%, respectively.
