Despite the overall decline, investor confidence remained anchored in the office segment, which attracted over $2 billion in inflows, accounting for 58% of total PE investments. This stability in office assets highlights their appeal due to scale, institutional depth, and reliable income streams.

Key Highlights from the Report:

• Total PE Investments: ~$3.5 billion in 2025 (down 29% YoY from 2024 levels of ~$4.9 billion).
• Office Sector Dominance: $2.001 billion invested, representing 58% share – volumes in line with the three-year average.
• Residential Sector: Second place with 17% share, driven by a shift towards downside-protected structures like credit-led instruments and de-risked projects.
• Warehousing: Third with 15% share, supported by e-commerce growth and supply-chain formalisation, though moderated by limited supply of stabilised assets.
• Retail: Limited activity at 11%, marked by selective large transactions focusing on high-performing assets.

The slowdown reflects a cautious global environment, with investors recalibrating around higher cost of capital, exit visibility, and valuation alignments. While India’s macroeconomic indicators improved, these factors constrained large-scale deployments, pushing capital towards income-focused and protected strategies.

Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, commented: “Knight Frank’s investment forecasting model points to a more supportive environment over the medium term. Private equity investments in Indian real estate are projected to rise by 28% year-on-year to approximately USD 4.4 billion in 2026. This recovery is expected to be measured, driven by selective growth rather than a broad-based return of risk capital.”

Office and logistics strategies are likely to lead the rebound, while residential and retail will continue emphasising structured opportunities. Stabilising interest rates and improving underwriting confidence are anticipated to accelerate deployments from 2026 onwards.

The report tracks core PE activity across office, residential, retail, and warehousing, excluding REITs, InvITs, hospitality, and data centres for comparable insights. Data is sourced from Knight Frank Research and Venture Intelligence, with investments considered up to December 20, 2025.

This moderation comes even as operational performance in office and retail segments remained strong, underscoring India’s real estate resilience amid global reassessments.

Also Read: Private Equity by US firms in India to decline in 2020

The post PE Investments in Indian Real Estate Decline 29% in 2025 to $3.5 Billion: Office Sector Leads with 58% Share appeared first on Square Feat India.

Key Insights from the Report

• Decline in Deal Numbers: The total number of PE deals dropped from 30 in 9M FY24 to 24 in 9M FY25.
• Increase in Average Deal Size: The average deal size grew to $117.3 million, driven by large-scale transactions like the Reliance-ADIA/KKR deal worth $1.54 billion.
• Sectoral Dominance: The industrial and logistics sector captured 62% of total investments, boosted by the Reliance-ADIA/KKR and Blackstone-LOGOS deals.

Breakdown of Asset Classes

The industrial and logistics sector emerged as the leader, followed by the residential and office sectors.

Top PE Deals

The top 10 PE deals accounted for 93% of total transactions. Key deals included:

1. Reliance-ADIA/KKR deal (Logistics, $1.54 billion)
2. GIC-Xander deal (Commercial, Hyderabad, $258 million)
3. Blackstone-LOGOS deal (Logistics, $204 million)

Funding Trends

• Hybrid Deals Lead: Hybrid transactions dominated, accounting for 55% of investments, compared to 24% for debt and 21% for equity.
• Domestic vs. Foreign Funding: Foreign investors retained a majority share at 82%, while domestic funding increased to 18%.

Sectoral Highlights

• Residential Sector: PE investments in residential projects rose to 15% in 9M FY25 from 12% in 9M FY24, reflecting strong housing demand.
• Commercial Sector: This segment faced challenges due to geopolitical concerns and high interest rates, though operational performance remains robust.
• Industrial & Logistics: Continued demand from e-commerce, manufacturing, and 3PL supported growth in this sector, with a shift toward Grade-A properties.

Shobhit Agarwal, CEO of ANAROCK Capital, noted, “The Indian real estate sector continues to attract significant PE investments, especially in logistics and warehousing. While challenges persist in commercial real estate, the anticipated reduction in interest rates in 2025 could drive renewed interest across asset classes.”

With increased demand for quality assets and evolving investor strategies, the PE landscape in Indian real estate is poised for further growth in the coming quarters.

Also Read: ahmedabad real estate market

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