Private equity investment in Indian real estate declines in H1 of 2025

Private equity (PE) investment in Indian real estate during the first half (H1) of 2025 reflects a market at an inflection point. Not only have the volumes receded sharply, but the very assumptions underpinning investor decision-making are undergoing a foundational rethink, according to Knight Frank India survey on the trends in PE investments in Indian real estate during H1 2025.

After a robust showing in 2024 with $4.9 billion in inflows, PE investments in H1 2025 dropped by 41% YoY to $1.7 billion. The number of deals also fell steeply, from 24 in H1 2024 to just 12 in H1 2025. This slowdown is not merely due to cyclical caution; rather, it reflects a structural recalibration in the cost of capital, return expectations, and comparative risk appetite among global investors and domestic institutions.

However, India’s real estate fundamentals remain intact. Residential sales volumes have held firm, and office absorption has been underpinned by demand from GCCs and technology occupiers. However, the capital market’s response has been more cautious. Investors have shown a clear preference for structured equity, credit-backed instruments, and platform-level transactions with predictable exit.

In H1 2025, Mumbai led PE inflows with $467.5 million, closely followed by Bengaluru at $452.5 million. Hyderabad with $258.6 million and Pune with $134 million also attracted meaningful capital, while Chennai received $50 million. Together the South Indian cities captured over 60% of the total investments, underscoring a sustained regional shift in institutional investor preference.

Private equity investment in the India office real estate sector in H1 2025 reflects a measured optimism shaped by asset quality, market positioning, and long-term tenancy profiles. In H1 2025, the office sector attracted $706 million in PE investments across three transactions, up 22% YoY in comparison to $579 million received in H1 2024. The underlying nature of these transactions points to concentrated, strategic capital allocations rather than broadbased market retrenchment.

Another key shift in H1 2025 is the near parity between investments in ready and under-construction assets. Of the $706 million deployed, roughly 50% was directed toward underconstruction developments up from just 23% in H1 2024. 

Private equity (PE) investments in India’s residential real estate sector during H1 2025 reflects a cautious yet selective deployment approach. At $500 million across six transactions, investment volumes fell by 41% YoY from H1 2024 levels. However, the overall trajectory should not be read as weakening sentiment, but rather a sharpening of focus on risk-mitigated, structured entry routes in mid-income and premium segments.

H1 2025 saw a distinct reversal to debt-heavy structures, with 60% of capital deployed in debt as compared to 40% in H1 2024.

Following a sustained run of high investor interest, the Indian warehousing sector entered a period of reflection in H1 2025. Capital inflows dropped to a decade low of $50 million, with only one transaction recorded during the first half marking a dramatic 97% decline compared to $1.5 billion H1 2024. While such sharp fluctuations are not uncommon in a sector dominated by platform-level deals, the current slowdown also signals a temporary reassessment of growth assumptions amid a shifting capital landscape.

In contrast to H1 2024, which was dominated by large-scale acquisition of ready assets ($1.5 billion), H1 2025’s sole transaction was in the new development category, valued at just $50 million. No deals were recorded in the ready or under- construction categories this half-year, which underlines a pause in brownfield capital deployment and a return to early-stage underwriting.

After a prolonged lull, India’s retail real estate sector staged a meaningful comeback in H1 2025, with private equity inflows reaching $480 million, a sharp recovery from zero deal activity in 2023 and 2024. The decline in PE investments in Indian real estate during H1 2025 is down 41% YoY. As global capital turns more selective, decisions are now governed by nuanced assessments of currency risk, post-tax returns, governance clarity, and exit possibilities.

I plan to invest in partnership firm promoted by my relative in Ahmedabad. Can an NRI invest in partnership firm planning real estate development?  Sanjay Gupta, Sharjah.

An NRI can invest in the capital of a firm on non-repatriation basis.  However, the Indian firm should not be engaged in any agricultural/plantation or real estate business or print media sector.  But a firm can invest in real estate development activity like residential or commercial development.  The amount invested shall not be eligible for repatriation outside India.  However, you can seek prior permission of Reserve Bank for investment in firm with repatriation option.   

While gifting immovable property, when does the receiver gets it legally in his possession? Prakash Leema, Dubai.

Gifts should be accompanied with a registered gift deed.  Once registered along with a gift deed, the receiver of the gift will get the legal ownership and right to possession of such property.