PE Investment in India’s Real Estate Reaches $2.82 Billion in April-Dec FY25

The multi-city deal took the frontline in the first nine of FY25. For cities, the Bengaluru and Hyderabad took the highest transaction tables in the share of deals to the tune of 11 per cent and 10 per cent, respectively.

Private equity (PE) investment in Indian real estate increased by 6 per cent to $2.82 billion during the first nine months of Financial Year 2024-25, said a report by real estate firm ANAROCK.

"The average deal size increased significantly by 32.5 per cent, which rose from $88.5 million in nine months of 2023-24 to $117.3 million in the same period of 2024-25," said Shobhit Agarwal, MD & CEO - ANAROCK Capital. "This jump marks the impact of huge-ticket transactions in the market wherein the top 10 deals hold 93 percent of total PE transactions."

Advertisement

The multi-city deal took the frontline in the first nine of FY25. For cities, the Bengaluru and Hyderabad took the highest transaction tables in the share of deals to the tune of 11 per cent and 10 per cent, respectively.

In the first nine months of FY25, the industrial and logistics sector captured 62 per cent of total investments, significantly surpassing both the office and residential sectors, which attracted 14 per cent and 15 per cent, respectively.

Advertisement

“The fact that the share of private equity investment in the residential sector rose to 15 per cent, up from 12 per cent in the same period last year reflects the increased activity in the housing market,” says Aashiesh Agarwaal of ANAROCK Capital.

However, stronger pre-sales and higher participation from PSU banks in construction finance may reduce the demand for high-cost private equity financing. This may require PE funds to get into earlier stages of project lifecycles to maintain IRRs, or to engage in special situations investments.

Advertisement

Though commercial real estate in India had high leasing activity, the private equity or PE activity within this space saw moderate levels because of geo-political risks and high interest rates, which dragged down valuations.

That aside, the space is expected to continue to shine because of the operation performance and fall in interest rates, the report said.

Advertisement

It has remained highly attractive to investors on the basis of strong growth, primarily on account of manufacturing, e-commerce, consumer demand, and third-party logistics (3PL).

Strong growth is augmented by a move from Grade-B to Grade-A properties, signifying a trend towards quality, larger formats, and ESG factors.

Advertisement

According to it, investor demand for warehouses endures and stands buoyed from steady investment-quality properties and unrelenting interest by institutional and high-net worth individuals.

Read also| Air India to Add More Premium Seats, Aiming for Higher Connecting Traffic and Growth Opportunities

Advertisement

Read also| Madhuri Dixit, Gauri Khan, Amrita Rao Among Celebs Who Bought OYO Shares Recently

Advertisement