India’s Real Estate Revival: Office Segment Leads $1.7 Billion PE Surge

India’s Real Estate Revival: Office Segment Leads $1.7 Billion PE Surge

A New Dawn for Indian Real Estate

India’s real estate sector is experiencing a remarkable resurgence, with private equity (PE) investments reaching $1.7 billion across 12 deals in the first half of 2025, according to a new report from Knight Frank India. Amid global economic headwinds and cautious capital deployment, the office segment has emerged as the star performer, drawing $706 million through just three major transactions—a 22% increase over the same period last year.

Grade-A Offices: The New Investment Haven

The surge in office real estate investment is not a broad-based trend but a targeted move toward Grade-A office spaces in prime markets. Investors are gravitating toward stabilized or near-stabilized assets, often accessed through joint ventures or REIT-aligned platforms. The report highlights a balanced risk appetite, with investments split nearly 50-50 between ready and under-construction office assets.

Resilience and Opportunity in Commercial Real Estate

“India’s commercial real estate continues to show resilience, driven by the return-to-office trend, healthy space absorption, and firming rental values,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India. The residential and retail sectors have also benefited from India’s robust economic momentum, encouraging investors to adopt a long-term view on the country’s property market.

The Rise of Credit Instruments in Residential Real Estate

While the residential sector remains below its 2015–16 peak in terms of volume, it has evolved significantly. Investment strategies are now more structured and risk-aware, shaped by regulatory reforms like RERA and GST. A notable trend in H1 2025 is the shift toward credit-based investments, with 60% of the $500 million in residential funding coming through debt instruments—up from 40% last year—reflecting a growing institutional preference for collateral-backed structures.

Cities at the Forefront of PE Activity

• Bengaluru and Pune: $350 million in PE inflows
• Mumbai: $115 million in PE inflows
• Hyderabad: Growing interest in plotted and villa projects

Bengaluru and Pune have led the charge, collectively attracting $350 million in PE inflows. Mumbai followed with $115 million, while Hyderabad is beginning to draw attention, particularly for plotted and villa projects. This signals an expanding investor appetite beyond India’s top metros, as confidence grows in the country’s stable growth outlook and regulatory clarity.

A Bright Future for Indian Real Estate

“As Western macroeconomic pressures begin to ease, we expect capital flows into Indian real estate to accelerate further,” Baijal concluded. With a strong foundation of regulatory reforms and a thriving economy, India’s real estate market is poised for sustained growth and innovation.