Private equity (PE) investment in Indian real estate increased significantly year-on-year (YoY) during the January-March quarter, which saw two large deals, including one in the residential space, according to data shared by Savills India (added), a property consultancy firm. However, in FY24-25, PE investment in the sector declined in the face of global economic volatility.
According to Savills, PE investment in real estate in the March quarter increased 35 percent YoY to $748 million. The quarter was marked by PE major Blackstone (added) committing to acquire stake in mid-size builder Kolte Patil Developers with an initial outlay of around $135 million. This is Blackstone's first major play in Indian residential real estate.
Other large deals during the quarter included the Temasek-backed CapitaLand India Trust investing around $171 million in MAIA Estates' office and retail project at Hebbal, in Bengaluru. Despite institutional investors preferring commercial assets due to better returns, PE investments during the quarter were largely in the residential segment, according to the Savills report.
"While 2024 had shown some improvement in PE inflows, Q1 (Jan-Mar) of 2025 has demonstrated a clear surge with 35 percent on-year growth. The residential segment, with 51 percent of the pie, underscores the confidence in the future of this space. Additionally, the Asia-Pacific regional inflow accounted for 53 percent of the foreign funding in this period, an indication of Asian investors’ strong interest," said Arvind Nandan, Managing Director, Research and Consulting, Savills India.
FY25 real estate inflows dip
Despite an improvement in real estate PE deals between January-March, observers noted that inflows are still on the lower end and are stabilising at those levels.
In FY25, at $3.7 billion, PE investment in real estate was flat on-year, but 43 percent down from a peak of $6.4 billion in FY21, according to data from property consultants Anarock.
While the year was dominated by the $1.5 billion debt-and-equity investment of the Abu Dhabi Investment Authority (ADIA) and KKR in Reliance Retail Ventures' warehousing assets, other major deals included GIC and Xander's $258 million investment in Shapoorji Pallonji Real Estate, Keppel Land's $251 million investment in RMZ Corp and CPPIB, and Alpha Wave Global buying 22 percent stake in a joint venture with Oberoi Realty, worth $145 million.
Shobhit Agarwal, Managing Director and CEO of Anarock Capital, said that the continued decline in flows from PE firms has been driven by "reduced foreign investor activity amid heightened global macroeconomic uncertainty and geopolitical volatility.”
The Anarock report also said that the size of an average PE deal (equity / debt) increased in FY25 over the year prior, from $75 to $94 million, while the number of deals reduced to 39 in FY25 against 51 in FY24. Anarock noted that the trend showed more focussed and strategic capital deployment, with more multi-city, pan-India deals as well, in order to have diversified portfolios.
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