India's Real Estate Market Demonstrates Robust Growth in H1 2025
Private equity investments in India’s office real estate sector during the first half of 2025 showed measured optimism, driven by high-quality assets, prime locations, and long-term tenancy visibility.
Real EstatePrivate EquityInvestmentCommercial Real EstateResidential Real EstateReal EstateJun 26, 2025
PE investments into the Indian real estate sector stood at $1.7 billion, spread across 12 deals in the April-June period. While overall capital deployment across real estate declined due to global macroeconomic pressures, the office segment stood out with $706 million invested across three transactions in H1 2025, marking a 22 per cent increase from $579 million in H1 2024, according to the report by Knight Frank India.
Rather than broad-based investment, this growth was fueled by strategic allocations into high-quality, Grade-A assets in core markets. Investors showed a preference for larger, stabilised or near-stabilised office spaces with strong cash flow potential, often through joint ventures or REIT-aligned platforms.
A notable trend in H1 2025 was the near-equal split between investments in ready and under-construction assets — about 50 per cent each, said the report. “India’s commercial real estate market continues to show strong fundamentals, driven by the return to office, rising absorption levels, and strengthening rental values,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Similarly, the residential sector has seen year-on-year growth, and retail consumption remains steady, supported by overall economic momentum. “These factors have encouraged investors to adopt a long-term outlook on the Indian market. As macroeconomic conditions in the West begin to ease, we expect global capital flows to return to Indian real estate, further supported by the country’s sustained growth and improving regulatory clarity,” he mentioned.
After witnessing a slowdown post 2017 due to regulatory shifts like RERA and GST, residential real estate has seen a transformation in investment strategy. While volumes in H1 2025 remained below the peak achieved in 2015-16, the nature of capital deployment has matured, with a sharper focus on structured and risk-mitigated approaches.
According to the report, a key trend in H1 2025 was the return to credit instruments – 60 per cent of the $500 million invested came through debt structures, compared to 40 per cent the previous year. Institutional investors preferred collateral-backed investments.
Bengaluru and Pune dominated capital absorption, accounting for nearly $350 million of total inflows. Mumbai received $115 million, while Hyderabad drew modest but growing interest in plotted and villa-based developments — signalling expanding investor interest beyond traditional metros, the report noted.
Frequently Asked Questions
What was the total PE investment in India’s real estate sector in H1 2025?
PE investments into the Indian real estate sector in H1 2025 stood at $1.7 billion, spread across 12 deals.
How much did the office segment investment increase in H1 2025 compared to H1 2024?
The office segment investment increased by 22 per cent, from $579 million in H1 2024 to $706 million in H1 2025.
What were the key trends in PE investment in H1 2025?
Key trends included strategic allocations into high-quality, Grade-A assets, a near-equal split between investments in ready and under-construction assets, and a return to credit instruments.
Which cities dominated capital absorption in H1 2025?
Bengaluru and Pune dominated capital absorption, accounting for nearly $350 million of total inflows. Mumbai received $115 million.
What regulatory changes affected the residential real estate market post 2017?
Regulatory shifts like RERA (Real Estate Regulatory Authority) and GST (Goods and Services Tax) caused a slowdown in the residential real estate market post 2017.
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