PE investments in Indian real estate sector decline 4% in H1 FY25

The decline is said to be mainly due to a 79% drop in investments in the office sector

Private equity (PE) investments in the Indian real estate sector declined by 4 per cent year-on-year (Y-o-Y) in the first half of the financial year 2025 (H1 FY25), according to a report by Anarock Capital. The investments reduced from $2.4 billion in the first half of FY24 to $2.3 billion in the first half of FY25.

The decline is said to be mainly due to a 79 per cent drop in investments in the office sector. Overall PE investments in commercial real estate declined from $1.7 billion in H1 FY24 to $0.4 billion in H1 FY25.

Shobhit Agarwal, managing director and chief executive officer of Anarock Capital, said, “Private equity investments in offices are primarily driven by foreign investors, which have tapered down due to global factors such as geopolitical tensions and elevated interest rates.”

Further, the industrial and logistics sector captured 67 per cent of the total PE investments in the sector during H1 FY25, led by the biggest real estate deal of the first half between Reliance Logistics and Warehouse Holdings (RLWH) and Abu Dhabi Investment Authority (ADIA) and KKR; ADIA and KKR invested $1.54 billion in RLWH’s warehouse assets at multiple locations.

“The aggregate numbers and the dominance of foreign investors in Indian real estate remained largely stable due to the ADIA/KKR investment in the Reliance Retail warehousing assets,” said Agarwal.

Moreover, as per the report, domestic and foreign investors upheld the same funding proportions as in the first half of the previous year, reflecting the continued dominance of foreign investors in Indian real estate investments. Eighty-seven per cent of the total PE investments in the real estate sector during H1 FY25 were from overseas investors.