Private equity investments in real estate fell by 4% in the first half of FY25, mainly due to lower investments in the office sector, Anarock said.
The total number of transactions also decreased from 24 (first half of 2024) to 17 (first half of 2025).
“Private equity investments in offices are primarily driven by overseas investors, but global factors such as geopolitical tensions and rising interest rates have tapered off that investment. Thanks to ADIA/KKR’s investment in warehouse assets in ) said.
Average deal size increased by 23% year over year. This was mainly due to Reliance and ADIA/KKR warehouse transactions, which accounted for 67% of the total investments made in H1 FY25. Additionally, the number of transactions decreased by 29%, contributing to an increase in average ticket size.
Among the top 10 private equity deals, residential real estate accounted for 15% of the deals. By comparison, only about 4% of the top 10 transactions in the same period last year were residential real estate debt transactions.
Reflecting the continued dominance of foreign investors in Indian real estate investments, domestic and foreign investors maintained the same funding share as in the first half of the previous year. In the first half of FY25, the industrial and logistics sector accounted for 67% of total investment, significantly exceeding total investment. Both the office and residential sectors (each attracted 17%). While private equity investment in the office sector fell by 79%, the industrial and logistics sector saw a significant 378% increase in investment compared to the same period last financial year. “The share of private equity investments in the residential sector rose to 17% from 8% in the same period last year, reflecting increased activity in this sector,” said Anarock Capital SVP Investments. Aashish Agarwal, Advisor) said:
“However, with stronger pre-sales and increased participation of PSU banks in construction financing, the demand for high-cost financing from private equity is likely to decline. There is a need to target the early stages of a project’s lifecycle to deploy investments,” Agarwal said.
The commercial office sector has long been a favorite target for private equity investment. However, geopolitical tensions and rising interest rates can have a significant impact on these investments.
“Despite the challenging global situation, the office rental market performed well this quarter, driven primarily by Global Capital Centers (GCCs) and flexible workspace solutions,” Shobhit Agarwal said. said.
The industrial and logistics sector continues to attract investors thanks to strong growth from manufacturing, e-commerce, consumption and 3PL. This trend is further accentuated by the shift from Grade B to Grade A properties, with an increased emphasis on quality, large format and ESG considerations. Interest in warehousing remains strong due to a steady supply of investment grade properties and healthy demand from institutional and HNI investors.
