New Delhi, Dec 28 (.) Private equity investment in India’s real estate sector saw a significant decline in 2025, reflecting a cautious investment environment during the year, Knight Frank India data released here on Sunday said.
It said the total private equity inflows into real estate stood at around USD 3.5 billion, showing a 29% drop compared to 2024, when investments were nearly USD 4.9 billion.
Even though overall investment activity slowed, the office real estate segment continued to attract the highest share of private equity funds. Close to USD 2 billion was invested in office properties in 2025, making up about 58% of total real estate private equity inflows.
Offices remained the preferred segment as they continued to see demand from businesses and long-term leasing arrangements.
The residential real estate segment received around USD 576 million in private equity investments during the year.
This was much lower than the amount invested in housing projects in 2024. Investors showed caution in funding new residential developments, leading to a noticeable reduction in overall inflows into this segment.
The warehousing and logistics segment also witnessed a sharp decline in investments. Private equity funding in warehousing dropped to approximately USD 510 million in 2025, compared with more than USD 1.8 billion in the previous year.
The fall was mainly due to slower deal activity and a more careful approach towards large-scale warehouse investments.
In contrast, retail real estate showed signs of recovery. Investments in retail properties reached around USD 374 million in 2025, after seeing very limited activity last year. However, investments remained focused on select high-quality assets rather than large-scale expansion.
Overall, the decline in private equity investment was influenced by a cautious funding environment. Concerns related to property valuations, clarity on exit opportunities, and higher capital costs led investors to adopt a selective approach.
During the year, there was also an increased preference for credit-based investment structures, instead of traditional equity investments.
Looking ahead, private equity investment in India’s real estate sector is expected to improve in 2026. Total investments are projected to rise to around USD 4.4 billion, although investment activity is likely to remain careful, with a focus on strong assets and stable returns.
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