Private equity (PE) investments in Indian real estate dropped marginally by 3% in FY25 to $3.7 billion, according to data released by Anarock Capital, a real estate consultancy Anarock division, marking the second consecutive year of decline, down from $3.8 billion in FY24, as investor sentiment remains cautious amid global economic challenges.

“PE investments have steadily declined over the past five years, dropping from USD 6.4 billion in FY21 to approximately USD 3.7 billion in FY25,” said Shobhit Agarwal, MD & CEO of Anarock Capital. He attributed the 43% fall primarily to “reduced foreign investor activity amid heightened global macroeconomic uncertainty and geopolitical volatility.”

Foreign investors continued to dominate the space, accounting for 84% of the total PE inflows last year, while domestic players contributed the remaining 16%. However, investor interest varied widely across asset classes. Office properties, once a stronghold for private equity, saw a steep 63% decline in investments—from $2.2 billion in FY24 to just $806 million in FY25. Despite healthy leasing activity, “investor caution persists due to high interest rates and geopolitical stress,” the report noted.

On a brighter note, warehousing assets attracted significant capital, helping offset the drop in office and residential investments. This shift indicates a growing appetite for logistics and industrial properties, aligned with India’s expanding e-commerce and manufacturing sectors.

The structure of deals also saw a notable shift. 

Hybrid instruments comprised 42% of total PE inflows in FY25, while pure equity and debt deals dropped to 37% and 21%, respectively, signalling that funds are adopting a more risk-managed, flexible investment approach.

Industry experts believe the modest dip in PE funding isn’t necessarily alarming. “A marginal 3 per cent dip in PE inflows is more a sign of market recalibration than concern,” said Binitha Dalal, Founder & Managing Partner of Mt K Kapital. “Investors are becoming more selective, focusing on quality assets and structured opportunities that promise long-term value over short-term gains.”

Ankur Jalan, CEO of Golden Growth Fund, echoed similar sentiments, pointing out that India’s growth momentum continues to attract attention. “Despite global uncertainties, India’s real estate sector remains resilient, and PE inflows have remained relatively stable,” he said.

While the numbers may suggest caution, the broader message is clear: private equity players are not pulling out—they’re simply becoming more strategic. Experts expect measured yet steady capital deployment as India’s real estate sector matures, especially in income-generating segments like warehousing and commercial assets.