Shifting Tides: The Decline of PE Investments in Indian Real Estate

Private equity (PE) investments in the Indian real estate sector totaled USD 1.73 billion as of June 15 this year, according to Knight Frank India, marking a significant decrease expected through the first half of 2025.

In 2024, the sector saw USD 2.96 billion in the same period, highlighting a notable downturn.

Knight Frank India cites a shift in global capital flows due to rising interest rates, tightening liquidity, and heightened investor scrutiny regarding risk-adjusted and post-tax returns as reasons for the decline.

Despite this trend, the office segment has drawn the highest share of PE capital, obtaining USD 706 million in early 2025.

In 2024, Indian real estate attracted USD 4.9 billion in PE, a figure substantially lower than the record USD 7.8 billion in 2018.

The consultancy noted that western institutional investment further decreased this year, influenced by factors such as a narrowing India-US yield spread and a depreciating Indian rupee.

However, domestic capital has played an increasingly significant role in supporting the sector.

(With inputs from agencies.)