Private Equity Investment in Indian Real Estate Plummets to Four-Year Low in H1FY26
Private equity investments in Indian real estate saw a significant decline in the first half of FY26, dropping 15% from the previous year to $2.2 billion, according to a report by ANAROCK Investment Banking.
Private EquityReal EstateInvestmentIndiaMarket TrendsReal EstateOct 13, 2025
In H1 FY26, the number of deals fell 12% to 22 from 25 a year ago, while the average deal size declined 31% to $77 million. The top 10 deals accounted for 77% of the total, compared with 93% a year earlier, suggesting a more even distribution of capital this year.
The largest transaction was Blackstone’s $377 million acquisition of South City Mall in Kolkata, followed by a $348 million deal involving Hines, Sumitomo, and Mitsubishi with Kanakia in Mumbai. Commercial and residential assets together drew most of the funding, while industrial and logistics projects saw no institutional deals in H1 FY26. Commercial offices accounted for 40% of total inflows, retail 17%, mixed-use 19%, residential 15%, data centres 5%, and hotels 4%.
The sector mix has changed sharply from last year, when industrial and logistics deals were prominent. By geography, Mumbai Metropolitan Region (MMR) and Kolkata led activity, together capturing half of all inflows. MMR’s share rose from 12% to 33%, driven by the Kanakia-Hines transaction, while Kolkata surged from nil to 17% due to the South City Mall sale. Chennai’s share increased to 13%, whereas pan-India or multi-city deals dropped to 7% from 51% in FY25.
Equity funding dominated, forming 78% of total inflows, up from 36% in FY25 when hybrid structures had been preferred. Debt deals made up the remaining 22%. Foreign investors contributed 73% of total capital, reversing last year’s dip, while domestic funds’ share fell to 7%. Hybrid deals—those involving both domestic and foreign capital—rose to 20%.
Among segments, residential real estate continued to consolidate, with fewer new launches but sustained investor appetite for equity participation. Retail assets benefited from strong financial performance, spurring two large transactions involving Nexus Select and Blackstone. Commercial office demand remained resilient, led by global capability centers and co-working operators, with $869 million worth of offices transacted—double the average seen in prior periods.
Institutional investors stayed on the sidelines of industrial and logistics deals but remain interested in quality assets linked to consumption, third-party logistics, and e-commerce. REITs saw renewed investor confidence, supported by SEBI’s reclassification of REITs as equities and a robust 15–27% rally in unit prices. The newly listed Knowledge Realty Trust was oversubscribed 12.5 times, while Mindspace REIT, Nexus REIT, and Embassy REIT were active in acquisitions and divestments.
According to ANAROCK, India’s status as a fast-growing economy and the formalisation of real estate markets are expected to sustain investor interest, even as the pattern of capital deployment shifts across cities and asset types.
Frequently Asked Questions
What was the total PE investment in Indian real estate in H1 FY26?
The total PE investment in Indian real estate in H1 FY26 was $2.2 billion, a 15% drop from the previous year.
Which cities saw the highest PE investment in real estate in H1 FY26?
Mumbai Metropolitan Region (MMR) and Kolkata led the activity, together capturing half of all inflows.
What sectors attracted the most PE investments in H1 FY26?
Commercial offices accounted for 40% of total inflows, followed by retail (17%), mixed-use (19%), and residential (15%).
What were the largest transactions in H1 FY26?
The largest transactions were Blackstone’s $377 million acquisition of South City Mall in Kolkata and a $348 million deal involving Hines, Sumitomo, and Mitsubishi with Kanakia in Mumbai.
How did the pattern of capital deployment change in H1 FY26?
The pattern of capital deployment shifted, with a more even distribution of capital and a focus on commercial and residential assets, while industrial and logistics projects saw no institutional deals.
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