Private equity investments in Indian real estate hit $1.7 billion across 12 deals in Q2 2025, with $706 million flowing into office assets alone, according to Knight Frank. Stabilised Grade-A spaces, credit-based residential deals, and rising investor confidence in cities like Bengaluru and Pune are driving capital inflows despite global uncertainty.
PE Investments in Indian Realty Touch $1.7 Billion in Q2, Office Sector Leads the Charge.
MUMBAI, June 26: India’s real estate market attracted $1.7 billion in private equity (PE) investments across 12 deals during April–June 2025, with the office segment emerging as the clear frontrunner, according to a new report released by Knight Frank India.
Despite persistent global economic challenges, investor sentiment toward India’s commercial real estate remains robust. The office segment alone secured $706 million across just three deals in H1 2025 — a 22% rise from the $579 million recorded during the same period last year.
Grade-A Office Spaces Draw Strategic Capital
Much of the capital flowed into stabilised or near-ready Grade-A office assets located in top-tier markets. These deals, often structured through joint ventures or Real Estate Investment Trust (REIT)-aligned platforms, reflect investors’ preference for properties with reliable rental yields and stable tenant profiles.
“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.
Interestingly, the report noted a nearly equal split between investments in ready and under-construction office assets — a sign of a balanced risk appetite among institutional players.
Residential Investments Lean Toward Credit Structures
While the residential segment has yet to hit the high volumes seen in 2015–16, it is evolving into a more mature, risk-aware market. In H1 2025, about 60% of the $500 million invested in housing came through debt instruments, up from 40% the previous year.
This shift indicates a growing preference for collateral-backed lending, a response to past regulatory reforms, such as RERA and GST, which have improved transparency and accountability across the sector.
Bengaluru, Pune Lead PE Inflows; Hyderabad Gains Attention
Bengaluru and Pune topped the list of cities attracting private equity, drawing a combined $350 million in the second quarter of 2025. Mumbai followed with $115 million, while Hyderabad emerged as a rising investment destination, particularly for plotted and villa projects, signalling a broader interest from investors beyond the traditional metros.
“As Western macroeconomic pressures begin to ease, we expect capital flows into Indian real estate to accelerate further,” Baijal added. India’s stable economic outlook and improved regulatory clarity are likely to sustain this momentum in the months ahead.
Looking Ahead: Long-Term Optimism Prevails
With a steady pipeline of Grade-A developments and continued interest in credit-backed residential deals, India’s real estate sector appears well-positioned for sustained private equity activity. While global headwinds persist, the country’s robust fundamentals and evolving asset mix are attracting both cautious and growth-focused investors.
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