Commercial Real Estate Propels Property Deals in India's Second Quarter
India's real estate sector witnessed a significant downturn in Q2 2025, with deal volume and value dropping substantially. However, commercial real estate emerged as a key driver, with several major transactions contributing to the sector's resilience.
Commercial Real EstateReal Estate DealsPrivate Equity InvestmentsCapital MarketsIndia Real Estate MarketReal EstateJul 14, 2025
Residential development and real estate tech contributed 23% and 15% of volumes, but only 10% and 5% of deal values, respectively. This highlights a shift in investor focus towards commercial assets, driven by their perceived stability and long-term growth potential.
As of the end of June, commercial assets continued to dominate deal activity, while capital markets showed tentative signs of recovery through Initial Public Offers (IPOs) and smaller Real Estate Investment Trust (REIT) platforms. Shabala Shinde, Partner and Real Estate Industry Leader at Grant Thornton Bharat, commented, “While private equity activity has moderated, investments like Mitsubishi, Sumitomo, and Hines in Kanakia and HDFC in Eldeco signal renewed institutional confidence in formal, scalable platforms. The capital shift into residential across metros and tier 2 cities reflects sectoral momentum—spanning housing, REIT-grade commercial, and tech-led models—driven by governance alignment and long-term capital.”
Private equity investments played a crucial role, contributing $580 million through seven deals. Notable transactions included Blackstone’s $378 million acquisition of South City Mall in Kolkata, Prime Offices Fund’s $87 million investment in Prius Platinum in South Delhi, IFC’s $50 million in Birla Estates, Lighthouse Funds’ $35 million in Knest Manufacturers, and Arnya Realestates Fund’s $15 million in Uniqus.
Merger and Acquisition (M&A) activity also saw some recovery, with six deals worth $195 million, representing a 42% increase in value but a 45% decrease in volume from the previous quarter. The return of capital markets was another positive sign, with two IPOs and two Qualified Institutional Placement (QIP) deals raising a combined $488 million.
These trends indicate a cautious optimism in the Indian real estate sector, with commercial real estate continuing to attract significant investment and residential markets showing signs of revival. The sector's resilience is further bolstered by the entry of institutional investors and the alignment of governance practices, which are expected to drive long-term growth and stability.
Frequently Asked Questions
What was the overall trend in India's real estate sector in Q2 2025?
In Q2 2025, India's real estate sector experienced a downturn with deal volume dropping by 54% and value decreasing by 35% to $775 million, according to Grant Thornton Bharat.
Which segment of the real estate sector performed the best in Q2 2025?
Commercial development led the sector, accounting for 62% of the total deal value with $480 million across five deals.
What role did private equity play in the real estate sector during Q2 2025?
Private equity contributed $580 million through seven deals, with notable transactions including Blackstone’s $378 million acquisition of South City Mall in Kolkata.
How did capital markets perform in the real estate sector in Q2 2025?
Capital markets showed signs of recovery with two IPOs and two QIP deals raising a combined $488 million.
What factors are driving the resilience in the Indian real estate sector?
The sector's resilience is driven by the entry of institutional investors, the alignment of governance practices, and the shift towards residential markets in metros and tier 2 cities.
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