Residential real estate captured 17% of private equity inflows, with investors preferring structured deals and assured cash flows
Mumbai
Private equity investments in India’s real estate sector reached approximately $3.5 billion in 2025, according to a report released on Sunday by Knight Frank India. The study highlights steady investor interest, with capital flowing into low-risk segments offering stable income.
Office assets remained the top choice, attracting 58 percent of total investments, or about $2 billion. The report noted that confidence in office real estate stems from rental stability, institutional demand, and the sector’s scale. Investment levels in offices stayed consistent with the three-year average, even as overall capital deployment moderated.
Residential real estate ranked second, capturing 17 percent of private equity inflows. Investors increasingly preferred structured and credit-led deals over pure equity, focusing on projects with assured cash flows and clear execution plans.
The slowdown in overall private equity investment in 2025 was attributed to a mismatch between capital costs, asset valuations, and exit visibility. Despite improvements in India’s GDP growth, inflation, and interest rates, investor appetite for high-risk capital remained cautious. Income-focused strategies dominated investment decisions.
The warehousing and logistics sector attracted 15 percent of total investments, benefiting from the growth of e-commerce, manufacturing, and formal supply chains. However, limited availability of stabilised institutional assets and cautious approaches toward new developments constrained investment volumes.
Retail real estate saw relatively low activity, accounting for just 11 percent of total inflows. Investor interest was concentrated on high-quality retail assets with strong operating performance and clear exit prospects, while secondary malls and repositioning opportunities struggled to attract attention.
Overall, the report reflects a selective, risk-conscious approach by private equity investors in India’s real estate market, with a preference for stable returns and predictable cash flows over speculative projects.
