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.

This marks a sharp reversal from previous years, where nearly half of all PE investments were concentrated in warehousing and logistics assets, fuelled by India’s e-commerce boom, manufacturing push, and 3PL expansion.

While overall private equity inflows into real estate fell 15% year-on-year to USD 2.2 billion in H1 FY26, the complete absence of Industrial & Logistics deals stands out as one of the most striking trends this year.

From 47% Share to 0%: The Numbers Tell the Story

“Industrial & Logistics was conspicuous by its absence this half-year, though investor interest remains high for quality assets,” notes the ANAROCK report.

Why the Slowdown Matters

The Industrial & Logistics segment is considered a backbone of India’s economic and consumption story. Warehousing parks, fulfilment centres, and last-mile logistics facilities support the rapid growth of e-commerce, manufacturing (PLI schemes), and urban distribution.

Between FY22 and FY25, this segment consistently attracted some of the largest institutional deals, as global investors like Blackstone, ESR, IndoSpace, and GIC bet big on India’s consumption-led growth.

The absence of deals this half-year does not indicate a lack of interest — instead, it reflects:

• Timing gaps: Several large deals are currently under negotiation but are yet to close.
• Valuation resets: Investors and developers are recalibrating prices amid changing cost structures and yield expectations.
• Regulatory & land issues: Acquiring large contiguous land parcels remains complex in key logistics corridors.

Investor Sentiment Still Positive

Despite the pause, institutional appetite remains strong. ANAROCK notes that “several transactions are currently under discussion, and some are likely to be closed in the coming months.”

Globally, logistics continues to be one of the most stable real estate asset classes. In India, strong consumption demand, growing 3PL activity, and supply chain diversification continue to support long-term investment interest.

Why Homebuyers Should Care

At first glance, Industrial & Logistics deals may seem far removed from residential buyers. But in reality, this segment plays a critical indirect role in shaping housing markets:

• Logistics hubs create jobs in manufacturing, warehousing, transport, and e-commerce. These hubs often drive new housing demand in peripheral areas.
• When investor funding slows, logistics park development can lag, affecting planned township and affordable housing projects near industrial belts.
• Many logistics corridors are linked to new transport infrastructure, which also benefits residential connectivity.

A slowdown here may temporarily delay ecosystem development around major logistics corridors like MMR outskirts, NCR peripheries, and Chennai–Bengaluru industrial belts.

Winners This Year: Retail, Offices & Data Centres

While Industrial & Logistics took a back seat, Commercial Office assets took a 40% share, Retail 17%, and Mixed-use 19%. Data Centres, too, attracted 5% of inflows — a sign of diversification in investor focus.

Also Read: Warehousing & Logistics sector shows resilience amidst Investment drought 

The post 🏭 Industrial & Logistics Saw No Deals This Half-Year — A Surprising Pause in India’s Real Estate Growth Story appeared first on Square Feat India.

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.

The COVID-19 pandemic transformed e-commerce into a primary shopping method for Indians. Initially driven by deep discounts, e-commerce’s appeal has endured even as these offers faded. By 2023, e-commerce comprised 7.1% of India’s total retail market, up from 4.7% in 2019, and is expected to reach nearly 10% by mid-2024.

Omni-Channel Retailing: A Game-Changer

Previously an optional strategy, omni-channel retailing has become essential. It aims to provide a seamless shopping experience across all channels, including physical stores, mobile apps, and online platforms. Although it first emerged in global markets like the United States, Canada, Europe, and China in 2010, India adopted it around 2017 with brands like Levi’s, United Colors of Benetton, and USPA leading the way in cities such as Delhi, Mumbai, and Bengaluru.

Some Key Statistics

Various data points highlight the importance of omni-channel strategies:

• According to Kantar IMRB, over 70% of Indian consumers research online before making offline purchases.
• PWC India reports that over 40% of consumers prefer a blend of online and offline shopping channels.
• A Harvard Business Review study shows that seamless omni-channel experiences can boost customer lifetime value by 20-25%.

Indian Success Stories

Some of the leading brands today exemplify the benefits of omni-channel retailing:

• Lenskart: Achieved a 70% conversion rate by combining online product discovery with offline try-ons and purchases.
• Fabindia: Enhanced convenience by integrating online and offline inventories for customer-driven fulfillment.
• Nykaa: Created a cohesive brand experience through beauty advisors in physical stores, personalized online recommendations, and click-and-collect options.

Expanding Offline Presence

In 2023, there was a 60% increase in direct-to-consumer (D2C) brands expanding into offline spaces across major retail markets, up from 9 to 11 cities. Brands are making stores more experiential, with a 59% increase in average store size from 730 sq. ft. in 2022 to 1,160 sq. ft. in 2023.

The Importance of Physical Stores

Despite the rise of e-commerce, physical stores remain crucial for building trust and enhancing brand image, especially for premium products. Pop-up stores and experiential centers play a vital role in engaging consumers and generating excitement.

The Omni-Channel Imperative

Harmonizing online and offline channels is key to meeting modern consumer expectations. Here are some essential strategies:

• Ensure seamless inventory visibility across channels.
• Implement click-and-collect, buy online return in store (BORIS), and other omnichannel fulfillment options.
• Train staff to be omnichannel champions, guiding customers seamlessly.
• Leverage data to personalize the experience across channels.

Adopting omni-channel retailing allows brands to meet the demands of today’s Indian consumers, offering convenience, diversity, and connectivity. This comprehensive approach positions brands to maximize their potential in the dynamic Indian retail market.

Also Read: Report Forecasts 8 MSF of New Retail Malls in India for 2024

The post Indian Retail Brands Embrace Omni-Channel Strategies to Boost Consumer Experiences appeared first on Square Feat India.

Pre Covid vs Post Covid Impact: Emergence of Grade A Malls 

In the previous three years (2020-22), annual average footprint of malls that were operational stood below 3.0 MSF, as developers shied away from this asset class that was worst hit due to the pandemic. Post-Covid, however, with shoppers coming back to fulfil their aspirational consumption, retailers experienced a dearth of good quality retailing space as most Grade-A malls experienced tight vacancies. Experiential retailing became the most preferred format for retailers looking for space, resulting in superior category malls witnessing lower single digit vacancies. 

Mainstreets Rentals Reach Pre-Covid Levels 

Prominent mainstreets rentals, which witnessed a rise over the last 4-6 quarters, continues to experience upward pressure across most markets. Overall, the retail space leasing volume across most of the top-8 cities were led by mainstreets, indicating the dearth of space in Grade A malls. As a result, highstreets such as Khan Market, Linking Rd., Galleria market, Banjara Hills, Adyar and many others saw rents nearing or even breaching the pre-Covid rents sometime earlier in the year 2023. 

Rental Growth across Prominent Mainstreets 

Speaking of the developments, Saurabh Shatdal, Managing Director, Capital Markets and Head of Retail, India, said – “Q4 2023 has been a monumental quarter for India’s Retail Segment. Not only has the retail sector marked a complete post-pandemic comeback, but it has also laid down a robust foundation for its sustained growth across categories like malls and main streets. With a surge in supply of new malls in Q4, the total mall supply across top 8 cities in 2023 surpassed the highs of 2019 by a nearly million sf. This reflects the strong interest from retailers in entering or expanding into the Indian market, fueled by evolving consumer preferences, shifting consumption patterns and a supportive business environment. We expect this momentum to continue with 2024 poised to be another strong year that will not only further boost the pipeline of physical retail supply but also foster overall economic growth through these commercialization activities.”  

For Ref – Snapshots of Rental Growth across some of the Prominent Mainstreets in Top 8 cities 

*Asking rent (INR/SF/month) on the carpet area of ground floor Vanilla stores is quoted 

Also Read: 25 Mn sq. ft. Mall Space to be Added in Top 7 Cities in Next 4-5 Years

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