The Indian real estate sector continues to navigate a rapidly evolving investment landscape, with private equity (PE) investments continuing to soften in FY25. According to the newly released Anarock report, PE investments have declined over the past few years, reaching USD 3.7 billion in FY25, down from USD 3.8 billion in FY24. This marks a continuous decrease from USD 4.4 billion in FY23, USD 4.3 billion in FY22, and USD 6.4 billion in FY21. This trend indicates a more cautious approach from investors in the Indian real estate market, reflecting broader economic uncertainties.
In FY25, the Private Equity (PE) landscape saw a notable shift toward fewer, larger transactions, with the top 10 deals accounting for a significant 81% of the total PE investment value, a sharp increase from 69% in FY24. This surge in concentration was largely driven by the massive Reliance–ADIA–KKR hybrid deal, which alone contributed approximately 42% of the total value for the year.
In FY25, Pan-India and Multi-city transactions saw a significant rise, accounting for 52% of the total deal value, up from 47% in FY24 and a much lower 25% in FY23. This shift indicates a growing preference for deals that span multiple cities across the country, reflecting a more diversified investment approach. Regarding individual markets, the National Capital Region (NCR) remained steady at 8%, while the Mumbai Metropolitan Region (MMR) decreased to 12% from 24% in FY24. Bengaluru's share rose to 10%, Chennai increased to 7%, while Hyderabad's share remained stable at 8%. Pune and Kolkata had minimal contributions, with Pune at 2% and Kolkata maintaining 0%. Notably, the “Other” category accounted for only 1% in FY25, suggesting that deals were increasingly concentrated in the major metros and pan-India regions.
The share of Pan-India and Multi-city transactions has seen significant fluctuations over the past few years. In FY19, it accounted for just 14% of the total deal value, but this share increased substantially to 26% in FY20. FY21 marked a peak, with Pan-India transactions making up 74% of the total deal value, reflecting a strong shift towards nationwide deals. However, in FY22, this share dropped to 32% and continued to decrease to 25% in FY23. In FY24, there was a recovery, with Pan-India transactions accounting for 47%, and this upward trend continued into FY25, reaching 52%. This progression highlights the growing emphasis on broader, multi-city investments over the last few years.
FY25 witnessed a notable shift in the funding structure, with hybrid deals taking a dominant share of 42% of total Private Equity (PE) capital. The high-profile Reliance-ADIA-KKR transaction largely drove this surge. In contrast, equity investments saw a significant decline, dropping to 37% from 74% in FY24, while debt investments decreased to 21%, down from 23% in FY24. Looking at the broader trend, the share of debt in the capital structure has fluctuated over the years, rising from 11% in FY21 to 32% in FY23 before stabilising at 21% in FY25. Meanwhile, equity investments have gradually declined from 88% in FY21 to just 37% in FY25, highlighting the growing preference for hybrid funding models in recent years.
In FY25, logistics and warehousing emerged as the dominant sector for Private Equity (PE) funding, attracting a remarkable 48% of the total capital, the highest share in the past five years. This marks a significant shift from the 8–21% range in previous years (FY21 to FY24), where the sector had a more modest share. The change in focus is further highlighted by the decline in funding to commercial real estate, which dropped sharply from 59% in FY24 to just 22% in FY25. Similarly, residential and data centre sectors saw reductions in funding, with residential down to 15% from 27% in FY24. Retail, which had received no funding in FY24, continued to see no investment in FY25. Other sectors combined accounted for 15% of the total, reflecting a shift in capital preferences towards logistics and warehousing.
Foreign funding in India’s real estate sector saw a significant rebound in FY25, with cumulative investments reaching USD 3.1 billion, up from USD 2.6 billion in FY24. This increase resulted in a notable rise in foreign investors' shares, accounting for 84% of total investment in FY25, compared to 68% in FY24. Despite ongoing macroeconomic volatility, this surge underscores a renewed global interest in India’s real estate market. Over the years, foreign capital has been the dominant player, starting with 94% of total investment in FY21 before gradually decreasing to 68% in FY24. In FY25, the share of domestic investors remained at 16%, while the mix of foreign and domestic capital had decreased significantly, with no major shift in the "Mix" category. This trend signals that foreign capital continues to be the primary source of investment in Indian real estate.
After a stellar run, the residential sector has entered a consolidation phase, with average deal size dropping to USD 117 million (Q2–Q4 FY25) from USD 233 million (Q1 FY23–Q4 FY25). However, international equity interest is emerging, as seen in Blackstone’s investment in Kolte Patil and Alpha Wave’s deal with Oberoi Realty.
Offices saw a steep decline in investment, USD 806 Mn in FY25 vs. USD 2.2 Bn in FY24. While leasing activity remains robust, investor caution persists due to high interest rates and geopolitical stress. The outlook is optimistic, with potential rate cuts on the horizon.
Retail continues to thrive on strong consumer demand. While mall operators like DLF, Nexus, and Phoenix are expanding aggressively, PE activity remains limited due to the dominance of well-funded players and REITs.
Warehousing demand is buoyed by manufacturing, e-commerce, and 3PL growth. A clear shift toward Grade A assets and ESG-compliant formats is observed, reinforcing long-term institutional interest.
