PE investments in Indian real estate up 6% in April-December despite slash in deals

The domestic real estate market is seeing a shift in private equity (PE) investments, as total funding increased by 6 per cent in the first nine months of FY25, even though the number of deals dropped. According to the FLUX-9M FY25 report by ANAROCK Capital, the capital markets division of property consultant ANAROCK, PE investments in the country reached $2.82 billion in the nine months to December 2024, up from $2.65 billion in the corresponding period a year ago. The number of deals declined to 24 from 30 a year ago.  

"The average deal size saw a notable increase of 32.5 pe rcent, climbing from $88.5 million in 9M FY24 to $117.3 million in 9M FY25," said Shobhit Agarwal, MD and CEO - ANAROCK Capital.  "This jump underscores the impact of large-scale transactions on the market, with the top 10 deals comprising 93% of total PE transactions," he added.

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The warehousing segment is quickly emerging as a key driver of real estate investments in India. Post-pandemic changes in global supply chains, along with the rise of e-commerce, have created strong demand for modern logistics and storage spaces, placing India as a preferred destination for institutional investors seeking high-growth opportunities.  

On the other hand, residential real estate, a traditional magnet for PE funds, saw lukewarm activity. Rising interest rates and concerns over unsold inventory in major markets kept investors cautious. Meanwhile, the commercial real estate sector, particularly office spaces, witnessed steady traction, buoyed by the IT/ITeS industry and a gradual return to workplaces.  

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Another notable shift is the preference for larger deals over smaller, fragmented transactions. Investors are focusing on high-quality assets with long-term growth potential and stable returns, mirroring global trends of portfolio consolidation amid economic uncertainties.  

Metropolitan cities such as Mumbai, Bengaluru, and the National Capital Region remain the top destinations for private equity funds due to infrastructure development and economic opportunities.