India's Real Estate Sector Sees REIT-Led Growth Amidst Deal Volume Decline
Despite a 54% drop in deal volumes and a 35% decline in values, India's real estate market witnessed a return of capital markets with significant IPOs, signaling cautious optimism and a focus on commercial assets.
Real EstateReitsInvestmentCommercial AssetsDeal ActivityReal Estate NewsJul 15, 2025
India’s real estate sector has experienced a significant cooldown in deal activity following a robust first quarter, according to a report by Grant Thornton Bharat. The report, titled ‘Real Estate Q2 2025 Dealtracker,’ highlights that the quarter saw 17 transactions worth $1.3 billion (including IPOs and QIPs). Excluding public market activity, there were 13 deals valued at $775 million. While deal volumes fell 54% and values declined 35% quarter-on-quarter, the market saw a notable return of capital markets, with two IPOs totaling $243 million and 2 QIPs at $245 million. Compared to Q2 2024, volumes dipped by 35% and deal values halved, reflecting a shift towards selective, large-ticket investments.
Commercial development continued to anchor deal value, accounting for 62% of total investment, as institutional capital targeted resilient, income-generating assets. With Small and Medium Real Estate Investment Trusts (SM REITs) momentum building and India’s largest-ever REIT issue expected in the second half of the year, the sector enters the second half with cautious optimism and an institutional focus.
Mergers and Acquisitions (M&A) Landscape
M&A activity witnessed a decline in volumes in Q2, falling 45% from the previous quarter to just 6—the lowest since Q2 2024. However, deal values rebounded, rising 42% quarter-on-quarter to $195 million, driven primarily by Max Estates Ltd’s $161 million acquisition of Boulevard Projects under a resolution plan. While inbound and outbound cross-border activity remained muted, the quarter reflected strong domestic consolidation with a focus on larger, strategic transactions. Compared to Q2 2024, volumes nearly halved, but values surged 60%, signaling a pivot towards fewer, high-value deals. Commercial development remained the dominant sub-sector, though activity moderated from Q1 highs. Residential development maintained deal flow momentum but saw value corrections, pointing to a preference for mid-sized assets. Real estate tech activity slowed, reflecting a pause in innovation-led dealmaking after a strong Q1. Notably, cross-sector M&A emerged as a theme, with players from textiles and media entering the commercial real estate space.
Private Equity (PE) Landscape
PE activity also slowed in Q2 2025, with deal volumes plunging 59% to just 7 transactions and values declining 45% to $580 million. This marks the sector’s second-lowest quarterly volume since Q2 2023. Despite the drop, the quarter closed on a high note with a $562 million worth investment recorded in June, led by Blackstone’s $378 million acquisition of South City Projects—highlighting sustained institutional interest in commercial development assets. Commercial platforms continued to dominate capital inflows, reinforcing the trend towards income-generating, operationally stable properties. In contrast, real estate tech witnessed a marked pullback, with deal count falling from six in Q1 to just two this quarter, reflecting a pause in momentum. However, Qatar Development Bank’s investment in Alt DRX—a digital platform for tokenized real estate—signals early interest in next-gen retail-focused property investments.
Initial Public Offering (IPO) & Qualified Institution Placements (QIP) Landscape
Capital market activity picked up in Q2, with two IPOs raising $243 million and two QIPs totaling $245 million. This marked a significant turnaround from Q1’s inactivity, reflecting a gradual return of investor confidence, especially in income-generating and platform-led real estate models. Kalpataru Limited stood out by raising capital through both IPO and QIP routes, securing a total of $268 million. The Small and Medium Real Estate Investment Trusts (SM REITs) segment also gained momentum, with fresh registrations signaling broader public market access for mid-sized developers. These developments point to a cautious but steady re-engagement with listed instruments, setting the stage for deeper capital market integration in H2.
Shabala Shinde, partner and real estate industry leader at Grant Thornton Bharat, commented, “H1 reflects a sector recalibrating for long-term strength. While overall deal values moderated, institutional capital continues to flow steadily into commercial platforms, reinforcing the asset class’s resilience. The return of IPO and SME REIT activity, alongside anticipation of India’s largest REIT, signals that capital markets are gearing up to play a larger role in driving real estate growth. As we move into H2, the sector is well-positioned for a more mature, innovation-led cycle of investment.”
Frequently Asked Questions
What was the overall trend in deal activity in Q2 2025 compared to Q1?
Deal volumes fell 54% and values declined 35% quarter-on-quarter, reflecting a significant cooldown in the real estate market.
What sectors are driving the real estate market's growth?
Commercial development continues to anchor deal value, accounting for 62% of total investment, as institutional capital targets resilient, income-generating assets.
What is the significance of the return of IPOs and QIPs in Q2 2025?
The return of IPOs and QIPs marks a significant turnaround from Q1’s inactivity, reflecting a gradual return of investor confidence in the real estate sector.
How has M&A activity changed in Q2 2025?
M&A activity saw a 45% decline in volumes but a 42% increase in deal values, driven by larger, strategic transactions and strong domestic consolidation.
What is the outlook for the real estate sector in the second half of 2025?
The sector is expected to see cautious optimism and a focus on commercial assets, with the anticipation of India’s largest REIT issue and continued institutional investment.
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