Indian Real Estate Attracts $2.82 Billion in PE Investments Despite Fewer Deals in FY25

A Resilient Performance Amid Challenges

India’s real estate sector demonstrated remarkable resilience in the first nine months of FY25 (9MFY25). Private equity (PE) investments rose 6% year-on-year to $2.82 billion, signaling a steady recovery despite geopolitical challenges and fluctuating interest rates.

According to ANAROCK, the number of deals declined from 30 in 9MFY24 to 24 in 9MFY25. However, the average deal size surged by an impressive 32.5%, growing from $88.5 million in 9MFY24 to $117.3 million in 9MFY25, indicating a stronger commitment to fewer but higher-value investments.

Major Deals Driving Growth

The growth story of FY25 was largely fueled by high-value transactions like the landmark Reliance-ADIA/KKR warehousing deal, which significantly impacted overall financial metrics. Following this, Shapoorji Pallonji and the $204 million Blackstone-LOGOS equity deal further reinforced the sector’s momentum.

Dominance of Logistics and Warehousing

The logistics and warehousing segment emerged as the standout performer, capturing 62% of the total PE investments. Shobhit Agarwal, MD & CEO of ANAROCK Capital, attributed this dominance to increasing demand for modern infrastructure and the sector's robust growth potential.

The residential sector, too, showed a promising rise. Its share of PE investments climbed to 15% in 9MFY25, up from 12% in the previous year, reflecting growing confidence in the housing market.

Shifts in the Commercial Real Estate Segment

While the commercial real estate sector experienced strong leasing activity, PE investment in this segment remained subdued due to geopolitical uncertainties and rising interest rates, which adversely impacted valuations.

Evolving Investment Dynamics

According to Aashiesh Agarwaal, SVP - Research & Investment Advisory at ANAROCK Capital, the residential sector's increased activity was bolstered by strong pre-sales and greater participation from PSU banks in construction finance. This trend may reduce the reliance on high-cost private equity funding for housing projects.

Hybrid transactions like the Reliance-ADIA/KKR deal dominated the investment landscape, with pure debt and equity deals remaining scarce.

Looking Ahead

India's real estate sector continues to evolve, with logistics, warehousing, and residential projects leading the charge. As geopolitical tensions stabilize and interest rates moderate, the potential for PE investments in commercial real estate could see a revival, offering a more balanced growth trajectory.