PE real estate investments fall 15% in H1 FY26 amid global crises: Report

Residential sales improve developers' cash flows as uncertainty in commercial real estate continues, report says

Private equity investments in Indian real estate fell 15 per cent to $2.2 billion in the first half of this financial year (H1 FY26) from the same time the previous year, said a report by property consultancy group Anarock, which cited global macroeconomic uncertainties as one reason for the trend.

 

Residential real estate sales increased to improve developers’ cash flows and reduce their reliance on costly alternative investment funds, said Shobhit Agarwal, chief executive officer, Anarock Capital. Banks are better capitalised and more willing to lend to real estate.

 

However, uncertainty continues in commercial real estate due to the war in Ukraine and global inflationary pressures affecting funding flows. “We consider this a temporary phenomenon, as India remains a growth market. Once uncertainties lift and clarity emerges, it is only a matter of time before private equity fund flows to commercial real estate pick up,” Agarwal said.

 

By asset class, commercial offices drew 40 per cent of investments, mixed-use 19 per cent, retail 17 per cent, and residential 15 per cent. No institutional transactions were recorded in industrial and logistics in H1 FY26, but institutional interest in quality assets remains high due to India’s consumption growth and ecommerce. Several deals are under discussion and expected to close soon, the report said.

 

Equity comprised 78 per cent of all deals, led by Blackstone’s agreement to buy South City Mall in Kolkata ($377 million), Kanakia-Hines-Mitsubishi-Sumitomo’s commercial deal in Mumbai ($348 million), and Nuvama-Cushman & Wakefield Management’s Prime Offices Fund transactions in Chennai ($288 million) and National Capital Region ($88 million).

 

Major debt deals included Century Real Estate’s $215 million transaction with Ares Asia & SC Lowy and Ashwin Sheth Group/YM Infra’s $63 million deal with PAG. Foreign capital’s share was at 73 per cent in H1 FY26, up from 65 per cent in FY25.

 

Real estate investment trusts performed strongly, with stock prices appreciating 15–27 per cent in H1 FY26 and distribution yields remaining resilient at 5–6 per cent.

 

“On a full-year basis, private equity activity has declined steadily from $6.4 billion in FY21 to $3.7 billion in FY25. While the H1 FY26 tally of $2.2 billion appears encouraging, it is still 15 per cent lower on a year-on-year basis compared to H1 FY25,” said Agarwal.