PE investments in Indian real estate down 43% in 5 years at $3.7 bn in FY25

Logistics & Warehousing claimed 48% of total investment - the highest in 5 years

Private equity investment in India's real estate projects have fallen 43 per cent over the past five financial years — to $3.7 billion in FY25 from $6.7 billion in FY21 — amid reduced foreign activity amid heightened global macroeconomic uncertainty and geopolitical volatility, according to a report by property consultant Anarock. 

 

As the number of deals also decreased — from 51 in FY24 to 39 in FY25 — the Indian real estate market has seen a shift in the type of deals taking place. The overall trend points to fewer but larger deals dominating the investment space. 

Funding in last five years

 

• FY21: $ 6.4 bn
• FY22: $4.3 bn
• FY23 $ 4.4 bn
• FY24: $ 3.8 bn
• FY25: $3.7 bn

 

Fewer deals, bigger investments

  The report highlights that the concentration of capital in fewer deals has increased significantly. In FY25, the top 10 deals accounted for 81 per cent of total PE investment value, a notable rise from 69 per cent in FY24. This shift towards larger investments is evident, as the average deal size surged from $75 million in FY24 to $94 million in FY25.

 

A major contributing factor to this spike in deal size is the mega hybrid transaction involving Reliance, ADIA, and KKR, which alone accounted for nearly 42 per cent of the total investment value in FY25. This deal is emblematic of a broader trend where larger institutional investors are making bigger, more strategic bets in fewer but larger transactions.

 

"While the number of deals dropped sharply to 39 in FY25 from 51 in FY24 – a decline of 24 per cent, total investment declined by 3 per cent,” said Aashiesh Agarwaal, senior vice-president & investment advisor, Anarock Capital. “This has led to a spike in average deal size — from $75 million to $94 million — highlighting a more focused and strategic deployment of capital.”

 

Key Transactions in FY25 

Several high-profile deals have dominated the PE landscape in FY25. Some of the largest transactions include:

 

• GIC-Xander and Shapoorji Pallonji: $258 million
• Keppel Land and RMZ Corporation + CPPIB: $251 million
• Blackstone and LOGOS India: $204 million
• Blackstone and Kolte Patil Developers: $134 million

 

Top 5 Debt Deals (FY25) 

  Capital Flows: Pan-India Preference

In FY25, Pan-India / Multi-city transactions accounted for 52% of all deal value—up from 47% in FY24 and just 25% in FY23.

 

“Barring the Covid year, pan-India and multi-city transactions have been rising steadily – increasing from 14% in FY19 to 52% in FY25. This underscores our view of a greater sector formalization and a shift toward large, diversified portfolios.” added Agarwaal.

 

Foreign Funding Rebounds

Foreign capital made a strong comeback, with cumulative investments in FY25 at $3.1 Bn, compared to $2.6 billion in FY24. The surge in foreign investments has led to an increased share of foreign investors in Indian real estate - accounting for 84% of total investment in FY25, up from 68% in FY24. This revival highlights a renewed global investor interest in India’s real estate story despite persistent macro volatility.

 

Market Insights by Sector

Residential Real Estate - The residential sector has entered a consolidation phase, with average deal size dropping to $117 million (Q2–Q4 FY25) from U$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.

 

Commercial Real Estate - Offices saw a steep decline in investment—$ 806 Mn in FY25 vs. $ 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 Real Estate - 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 dominance by well-funded players and REITs.

 

Industrial & Logistics - Warehousing demand is buoyed by manufacturing, e-commerce, and 3PL growth. A clear shift toward Grade A assets and ESG- compliant formats is being observed, reinforcing long-term institutional interest.