PE investment in India real estate slips 29% in 2025; office assets lead inflows: Knight Frank report
Residential real estate emerged as the second-largest investment segment, accounting for 17 per cent of total private equity inflows.
- Dec 28, 2025,
- Updated Dec 28, 2025 6:09 PM IST
Private equity investments in India’s real estate sector dropped 29 per cent in 2025, though office real estate remained the top choice for investors, according to Knight Frank.
Total private equity inflows into the sector stood at $3.5 billion during the year, with office assets attracting more than $2 billion, accounting for 58 per cent of the total investment.
In its report, Trends in Private Equity Investments in India: H2 2025, Knight Frank said investment levels remained close to the three-year average despite global uncertainty, indicating steady investor confidence.
The consultancy said investors remained cautious as the market underwent a “sharp recalibration across three interconnected dimensions – the effective cost of capital, exit visibility, and valuation alignment.”
While macroeconomic indicators such as GDP growth, interest rates and inflation showed improvement, the report said these factors “failed to realign quickly enough to support sustained capital deployment.”
Residential real estate emerged as the second-largest investment segment, accounting for 17 per cent of total private equity inflows.
Knight Frank also noted a shift in investor strategy, with increasing preference for “credit-led instruments over pure equity exposure.”
Warehousing ranked third, attracting 15 per cent of total investments, supported by demand from e-commerce expansion, supply chain formalisation and manufacturing growth.
Retail real estate saw limited investment activity, making up 11 per cent of total inflows. Capital deployment was restricted to assets meeting “strict criteria on scale, operating performance, and exit visibility.”
Commenting on the outlook, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said, “Knight Frank’s investment forecasting model points to a more supportive environment over the medium term. Based on assumptions around government capital expenditure, currency movement, inflation, interest rates and incremental office supply, private equity investments in Indian real estate are projected to rise by 28 per cent year on year to approximately $4.4 billion in 2026. This recovery is expected to be measured, driven by selective growth rather than a broad-based return of risk capital.”
(With ANI inputs)
Private equity investments in India’s real estate sector dropped 29 per cent in 2025, though office real estate remained the top choice for investors, according to Knight Frank.
Total private equity inflows into the sector stood at $3.5 billion during the year, with office assets attracting more than $2 billion, accounting for 58 per cent of the total investment.
In its report, Trends in Private Equity Investments in India: H2 2025, Knight Frank said investment levels remained close to the three-year average despite global uncertainty, indicating steady investor confidence.
The consultancy said investors remained cautious as the market underwent a “sharp recalibration across three interconnected dimensions – the effective cost of capital, exit visibility, and valuation alignment.”
While macroeconomic indicators such as GDP growth, interest rates and inflation showed improvement, the report said these factors “failed to realign quickly enough to support sustained capital deployment.”
Residential real estate emerged as the second-largest investment segment, accounting for 17 per cent of total private equity inflows.
Knight Frank also noted a shift in investor strategy, with increasing preference for “credit-led instruments over pure equity exposure.”
Warehousing ranked third, attracting 15 per cent of total investments, supported by demand from e-commerce expansion, supply chain formalisation and manufacturing growth.
Retail real estate saw limited investment activity, making up 11 per cent of total inflows. Capital deployment was restricted to assets meeting “strict criteria on scale, operating performance, and exit visibility.”
Commenting on the outlook, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said, “Knight Frank’s investment forecasting model points to a more supportive environment over the medium term. Based on assumptions around government capital expenditure, currency movement, inflation, interest rates and incremental office supply, private equity investments in Indian real estate are projected to rise by 28 per cent year on year to approximately $4.4 billion in 2026. This recovery is expected to be measured, driven by selective growth rather than a broad-based return of risk capital.”
(With ANI inputs)