Private equity investments in India's real estate down: Here's why
What's the story
Private equity (PE) investments in Indian real estate have witnessed a steep decline of 29% this year, amounting to $3.46 billion. The fall is largely attributed to a decrease in funding for housing and warehousing projects. Despite better macro-economic conditions, investors remained cautious, resulting in a sharp recalibration of capital deployment strategies. Last year, PE investments had stood at $4.9 billion.
Asset class performance
PE fund inflow in office assets rises
According to a recent analysis by real estate consultant Knight Frank India, the PE fund inflow in office assets has increased to $2 billion this year from $1.85 billion in 2024. Office assets now account for 58% of total inflows in 2025. Retail real estate also saw an influx of $374 million this year, compared to no inflow at all last year.
Investment downturn
PE investments in housing and warehousing decline
On the flip side, PE investments have taken a hit in the housing and warehousing segments. The housing sector attracted $576 million this year, down from $1,177 million last year. Similarly, funds inflow into warehousing parks plummeted to $510 million this year from a whopping $1,877 million last year.
Market analysis
Knight Frank India explains the decline in PE investments
Knight Frank India has explained the decline in PE investments as a sharp recalibration across three interconnected dimensions: effective cost of capital, exit visibility, and valuation alignment. The firm said that these investments have declined despite improvements in macro-economic conditions such as GDP growth, interest rates, and inflation. However, these three variables have not realigned fast enough to support sustained capital deployment.