As per ANAROCK Capital’s latest FLUX report, total PE investments stood at USD 2.2 billion in H1 FY26, compared to USD 2.5 billion in the same period last year. This decline is mainly due to fewer large transactions, even though average deal sizes are stable.

PE Funding Trend: From USD 6.4 Bn to 3.7 Bn in 4 Years

“The strong start in Q1 FY26 gave hope, but activity tapered again in Q2,” says Shobhit Agarwal, CEO, ANAROCK Capital.

MMR & Kolkata Take Centre Stage as Multi-City Deals Shrink

Interestingly, the Mumbai Metropolitan Region (MMR) saw its share in total PE inflows jump from 12% to 33%, while Kolkata went from 0% to 17%. This suggests investors are increasingly backing city-specific projects over pan-India portfolios.

For homebuyers, this indicates more focused investments in select markets like MMR, Kolkata, and Chennai — potentially driving more project launches, better infrastructure, and price action in these cities in the coming years.

Where the Money Is Going: Retail, Offices & Data Centres Rise

The asset class mix has shifted notably. While Industrial & Logistics saw no deals this half-year, segments like Retail, Mixed-use, Commercial Offices, Hotels, and Data Centres saw healthy activity.

Why this matters for homebuyers:

• Increased investment in retail and mixed-use means better amenities and integrated townships, especially in upcoming urban areas.
• Commercial office investments create employment hubs, which often lead to new residential demand in nearby micromarkets.
• Data centre growth hints at new infrastructure corridors, especially near metros.

Deal Sizes Stable, But Fewer Mega Deals

The average deal size remained in the USD 60–100 million range, but the number of transactions fell, dragging overall volumes down.

The share of the Top 10 PE deals dropped from 93% in H1 FY25 to 77% in H1 FY26 — indicating a broader distribution of deals across more projects rather than just a few giant transactions.

Foreign Capital Bounces Back

Foreign investors are still dominant in India’s real estate story. Their share in total investments rose to 73% in H1 FY26, after dipping to 65% in FY25.

Equity deals accounted for 78% of total deals, showing continued long-term confidence, despite short-term caution.

Residential Market: Investors Still Interested

Even with fewer PE deals overall, residential real estate continues to draw investor attention thanks to:

• India’s fast-growing economy
• Increasing formalization of the sector
• Stable pricing and strong end-user demand, especially in metro cities.

This means new launches, especially in MMR and Chennai, are likely to keep coming, giving homebuyers more options — though at potentially higher price points in areas with fresh capital inflows.

Key Takeaways for Homebuyers

• More city-focused investment = stronger local infrastructure and more projects in select cities like MMR & Kolkata.
• Rise in retail & mixed-use investment could improve quality of life in upcoming areas.
• Commercial focus may create job-housing clusters, potentially driving up demand and prices in those zones.
• Foreign investors returning signals long-term confidence in India’s property market, which usually precedes new supply cycles.

Also Read: Private Equity in Indian Real Estate Drops, But Bigger Deals Take Center Stage

The post 🏠 Fewer Big Investors, More City-Focused Deals: What the Slowdown in Private Equity Means for India’s Real Estate Market appeared first on Square Feat India.

Total institutional investments in Indian real estate stood at USD 3.0 billion in H1 2025

Q2 2025 Registers a 29% Uptick Over Q1 2025

After a relatively slow Q1, Q2 2025 saw a significant rise in investment flows, touching USD 1.7 billion, up 29% sequentially.

“Domestic capital has emerged as a key driver in India’s real estate investments… Their growing dominance has helped cushion the impact of global uncertainties.”
— Badal Yagnik, CEO, Colliers India

Domestic vs Foreign Investments (USD Million)

“Despite a drop in foreign capital, total investments remain above the half-yearly average of USD 2.6 billion since 2021.”
— Colliers Report

Asset Class-Wise Investment Trends

“The residential segment continued its strong run… The retail sector is also witnessing a steady revival.”
— Vimal Nadar, Head of Research, Colliers India

* Alternate assets include: data centers, life sciences, student housing, schools, senior housing, and holiday homes.

City-wise Investment Performance

“Mumbai and Bengaluru together accounted for 39% of total inflows, led by residential and office deals. Retail emerged strong in Kolkata due to large transactions.”

Key Highlights at a Glance

• USD 3.0 Bn institutional investments in H1 2025 (↓15% YoY)
• Domestic investors: USD 1.4 Bn, ↑53% YoY
• Foreign investors: USD 1.6 Bn, ↓39% YoY
• Top segments: Residential (27%), Office (24%), Mixed-use (21%)
• Top cities: Mumbai (22%), Bengaluru (17%), Kolkata (13%)

Also Read: Indian Real Estate: Riding Higher in 2025

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Domestic investors followed a similar trend, with their share dropping to 30% in 2024 from 35% in the previous year. However, they too recorded a 36% growth in investment value.

A notable highlight was the rise of co-investments—joint funding by foreign and domestic investors—which surged to 16% of total investments in 2024, compared to a negligible share in 2023. Co-investments registered a remarkable 61-fold increase in value, as foreign investors leveraged the local expertise of domestic partners amid macroeconomic uncertainty.

Institutional investments in real estate reached USD 6.8 billion in 2024, marking a 61% year-on-year increase and surpassing pre-pandemic levels. This resurgence comes after a four-year decline, driven largely by the industrial and warehousing sector, which benefited from robust e-commerce and quick-commerce demand.

Shifts in Asset Investment

The commercial real estate segment, which has traditionally dominated investments, accounted for 35% of total investments in 2024, down from 61% in 2023. The decline reflects a slowdown in the IT-ITeS sector, although growing demand for Global Capability Centers (GCCs) is expected to renew interest in office spaces.

Meanwhile, the residential sector attracted USD 2 billion in investments, representing 30% of the total and a 171% increase from 2023. Similarly, the industrial and warehousing sector grew by 203%, increasing its share from 15% in 2023 to 28% in 2024.

Yearly Investment Trends

Institutional investments rebounded in 2024 after consecutive declines since 2020. The yearly investment trend highlights the following:

Expert Outlook

Shrinivas Rao, FRICS, CEO of Vestian, noted, “Despite a slow start, institutional investments in 2024 exceeded pre-pandemic levels. However, 2025 could pose challenges due to geopolitical tensions, global economic slowdown, and elevated inflation. A potential repo rate cut by the RBI could stimulate real estate activity, attracting more investors.”

Return-to-office policies, government initiatives like the Production Linked Incentive (PLI) scheme, and a focus on affordable housing are expected to boost real estate demand and investor participation in the coming years.

Key Insights:

• Foreign Investors: 54% share, USD 3.7 billion investments.
• Co-Investments: 16% share, 61-fold increase in value.
• Sector Growth: Residential investments up by 171%; industrial and warehousing up by 203%.
• 2024 Total Investments: USD 6.8 billion, up 61% year-on-year.

Also Read: cross-border investment

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In addition to AIF investments, the real estate sector also raised ₹12,801 crore through Qualified Institutional Placements (QIPs) during the same period, further emphasizing the strong investor confidence in the market. These investments highlight the sector’s growing appeal, bolstered by increasing demand and a steady reduction in unsold inventory in major cities across the country.

The sector’s performance is driven by a growing reliance on equity financing, particularly through Category II AIFs, which include real estate funds, private equity, and debt funds. Over the past five years, Category II AIFs have accounted for nearly 80% of total AIF commitments, reflecting their flexibility and tailored investment strategies.

Foreign Portfolio Investors (FPIs) have also ramped up their involvement, with their participation in Category II AIFs now matching that of domestic investors in funding key real estate projects.

Prashant Sharma, President of NAREDCO Maharashtra, highlighted the crucial role of AIFs in bridging funding gaps within the real estate sector. “The record ₹75,468 crore invested in real estate through AIFs in H1 FY25 underscores the sector’s resilience and growth potential. With strong sales in major cities and declining unsold inventory, investors are recognizing the sector’s long-term value. AIFs are not just funding projects—they’re shaping the future of urban infrastructure and housing in India,” he said.

Kuldeep Jain, Founder and CEO of Build Capital, also emphasized the transformative impact of AIFs on the real estate landscape. “The growing reliance on Category II AIFs highlights their role in reshaping the sector. These investment vehicles channel significant capital into the industry while partnering with reputed developers, ensuring strategic asset selection, prime location analysis, and timely financial closure. This comprehensive approach facilitates project completion and delivery, driving higher, secured returns for investors. AIFs are meeting the increasing demand for housing and urban infrastructure, making real estate a preferred asset class for institutional investors.”

Anarock’s data reveals that more than 1.36 million housing units have been launched across the top seven cities between 2021 and September 2024. During the same period, around 1.44 million units were sold, contributing to a 10% decline in unsold inventory despite the high supply rate. This trend highlights the sector’s growing appeal to institutional investors.

The steady increase in AIF commitments, with both domestic and foreign investors contributing, is expected to continue driving the growth of India’s real estate sector. As developers tap into these funding resources to meet the rising demand for housing and infrastructure, the sector is set to maintain its dominant position in the investment landscape.

With innovative funding mechanisms like AIFs leading the charge, the real estate sector is poised to remain a cornerstone of India’s economic growth.

Also Read: Central Suburbs: Mumbai’s Key Hotspot for Real Estate Investments

The post Investor Confidence Soars as Real Estate Leads AIF Investments in H1 FY25 appeared first on Square Feat India.

Colliers’ 2024 Investor Insights – Country Spotlight Seriesprovides real estate investors and owners with unique insights into the year ahead and a deep understanding of key markets across the Asia Pacific region.

“2024 is anticipated to be a more dynamic year for the both the Asia Pacific real estate markets as well as capital in the region remaining the dominant investor in global real estate. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s diversity and increased opportunity. ” Chris Pilgrim, Colliers Managing Director of Global Capital Markets, APAC, said.

Key findings include:

Singapore: Singapore has earned a reputation as a safe haven and a highly favourable base for global real estate investments; it stands out for those looking to invest in quality core assets, offering long-term capital appreciation and stable yields for decent total returns.

China: Almost all asset classes have experienced price corrections, presenting a favorable opportunity for long-term investors. C-REITs offer alternative exit channels for investors and help attract more domestic capital.

India:  India’s economic resilience, coupled with favorable investment climate and rapid urbanization, has enhanced its appeal as a promising investment destination for global funds. 

With IMF’s projected GDP growth rate of 5.7% in 2024, India remains one of the fastest-growing economies globally, and one of the most preferred emerging countries within the Asia-Pacific (APAC) region, offering attractive pricing, better valuations, and higher yields. 

Foreign inflows too witnessed a rebound in 2023 registering a 20% YoY rise at USD 3.6 Billion. These investments were not confined to traditional avenues but extended to alternative asset classes, bolstering the robust domestic growth in office, residential, and industrial segments. Going forward, investor appetite is likely to remain strong with newer funds looking to enter the Indian market. While strong preference continues for income-yielding office assets, residential, industrial and alternatives are likely to witness renewed interest. 

“Investments in Indian Real Estate have been consistent for the past few years and have an innate potential to grow further on account of structural changes in demand for capital. Global investors have always remained at the forefront and consistently infused average USD 4 Billion annually in the last five years, showcasing continued commitment and confidence towards the sector. With a rise on performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures the sector is poised to attract even more investments in the next few years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. 

Average annual institutional inflows into India 2019-23 (USD Bn)

Source: Colliers 

Sector wise average foreign inflows into India 2019-23 (USD Bn)

Source: Colliers 

India’s real estate sector sees rising interest from the APAC countries 

While countries such as the US and Canada remain top source countries for capital, leading APAC countries such as Singapore, Hong Kong, South Korea, and Japan are also gradually eyeing India’s growing real estate market. In 2023, Investment inflows from the APAC region surged 57% YoY to USD 1.8 billion, of which 70% were in office assets. However, apart from office assets, APAC countries have also shown interest in residential, industrial, and warehousing assets. During 2023, the inflows almost doubled since 2019, signaling a significant uptick in investor interest and confidence in India’s real estate sector.

Investment inflows from APAC region in Indian real estate (2019-2023) – 

Source: Colliers 

Looking ahead to 2024, investors are expected to increase their activity in India’s real estate market, driven by a robust economic performance, positive business environment and robust demand across core and alternative sectors. Anticipation of heightened activity in a way reflects certainty around the policy environment, narrowing gap between buyers and sellers and investor intent to deploy more capital across real estate asset classes. 

“In 2023, a striking 90% of investment inflows into India’s office sector originated from foreign investors, demonstrating strength of the underlying asset class. This marks a transformative period for the industry. Furthermore, as sustainability gains further prominence in investment decisions, the real estate sector including office market of India is set to align seamlessly with global Environmental, Social, and Governance (ESG) standards.”,said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Also Read: Indian investors invested USD 335 Mn in Dubai’s Market in H1 2023 (Jan to June) – Vestian

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