Private Equity Investments in Indian Real Estate Decline 15% in H1FY26: Anarock Report
Private equity investments in Indian real estate fell 15% to $2.2 billion in the first half of this financial year (H1 FY26) from the same period last year, according to a report by Anarock. Despite the decline, industry experts remain optimistic about the future of the market.
Real EstatePrivate EquityInvestmentAnarockMarket TrendsReal Estate NewsOct 10, 2025
Residential real estate sales increased, which helped improve developers’ cash flows and reduce their reliance on costly alternative investment funds, according to Shobhit Agarwal, chief executive officer of Anarock Capital. Banks are better capitalised and more willing to lend to the real estate sector.
However, uncertainty continues in commercial real estate due to the war in Ukraine and global inflationary pressures affecting funding flows. “We consider this a temporary phenomenon, as India remains a growth market. Once uncertainties lift and clarity emerges, it is only a matter of time before private equity fund flows to commercial real estate pick up,” Agarwal said.
By asset class, commercial offices drew 40 per cent of investments, mixed-use projects accounted for 19 per cent, retail projects for 17 per cent, and residential projects for 15 per cent. No institutional transactions were recorded in industrial and logistics in H1 FY26, but institutional interest in quality assets remains high due to India’s consumption growth and ecommerce. Several deals are under discussion and expected to close soon, the report noted.
Equity comprised 78 per cent of all deals. Notable transactions include Blackstone’s agreement to buy South City Mall in Kolkata for $377 million, Kanakia-Hines-Mitsubishi-Sumitomo’s commercial deal in Mumbai for $348 million, and Nuvama-Cushman & Wakefield Management’s Prime Offices Fund transactions in Chennai for $288 million and in the National Capital Region for $88 million.
Major debt deals included Century Real Estate’s $215 million transaction with Ares Asia & SC Lowy and Ashwin Sheth Group/YM Infra’s $63 million deal with PAG. Foreign capital’s share was at 73 per cent in H1 FY26, up from 65 per cent in FY25.
Real estate investment trusts (REITs) performed strongly, with stock prices appreciating 15–27 per cent in H1 FY26 and distribution yields remaining resilient at 5–6 per cent.
“On a full-year basis, private equity activity has declined steadily from $6.4 billion in FY21 to $3.7 billion in FY25. While the H1 FY26 tally of $2.2 billion appears encouraging, it is still 15 per cent lower on a year-on-year basis compared to H1 FY25,” said Agarwal.
Frequently Asked Questions
What is the primary reason for the decline in private equity investments in Indian real estate?
The primary reason for the decline is global macroeconomic uncertainties, including the war in Ukraine and global inflationary pressures.
How has the residential real estate sector been affected?
Residential real estate sales have increased, improving developers’ cash flows and reducing their reliance on costly alternative investment funds.
What is the distribution of investments by asset class?
Commercial offices drew 40 per cent of investments, mixed-use projects accounted for 19 per cent, retail projects for 17 per cent, and residential projects for 15 per cent.
What is the future outlook for private equity investments in commercial real estate in India?
Experts consider the current decline a temporary phenomenon and expect private equity fund flows to commercial real estate to pick up once uncertainties lift and clarity emerges.
How have real estate investment trusts (REITs) performed in H1 FY26?
REITs have performed strongly, with stock prices appreciating 15–27 per cent in H1 FY26 and distribution yields remaining resilient at 5–6 per cent.
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