Daijiworld Media Network - Mumbai
Mumbai, Jun 26: Private equity (PE) investment in India’s real estate sector totaled $1.7 billion across 12 deals during the April–June period, with the office segment emerging as the top performer, according to a new report released Thursday by Knight Frank India.
Despite broader caution in capital deployment due to global economic headwinds, $706 million flowed into India’s office real estate through just three major transactions in the first half of 2025. This marks a 22% jump from the $579 million recorded in the same period last year.
The growth wasn’t broad-based but concentrated in strategic allocations toward Grade-A office spaces in prime markets, buoyed by strong tenancy profiles and reliable cash flows. Investors favored stabilised or near-stabilised assets, often accessed via joint ventures or REIT-aligned platforms, the report noted.
Another key insight: the investment split between ready and under-construction office assets was nearly 50-50, signalling balanced risk appetite.
“India’s commercial real estate continues to show resilience, driven by the return-to-office trend, healthy space absorption, and firming rental values,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
He added that residential and retail segments have also benefited from India’s economic momentum, further encouraging investors to adopt a long-term view on the country’s property market.
Credit Instruments on the Rise
The residential sector, while still below the 2015–16 peak in terms of volume, has seen a strategic evolution. Investment strategies are more structured and risk-aware, shaped by past regulatory reforms such as RERA and GST.
A major trend in H1 2025 is the shift toward credit-based investments. About 60% of the $500 million in residential sector funding came through debt instruments, up from 40% last year, reflecting growing institutional preference for collateral-backed structures.
Cities Driving PE Activity
Bengaluru and Pune led the pack, collectively attracting $350 million of PE inflows. Mumbai followed with $115 million, while Hyderabad began drawing interest, particularly in plotted and villa projects—indicating an expanding investor appetite beyond India’s top metros.
“As Western macroeconomic pressures begin to ease, we expect capital flows into Indian real estate to accelerate further,” Baijal concluded, citing India’s stable growth outlook and regulatory clarity as key enablers for sustained investment.