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Private equity investments in India's real estate sector dropped by 15% year-on-year in H1 FY26, totaling USD 2.2 billion, though average deal sizes remained stable between USD 60 million and USD 100 million. The decline is part of a longer-term slowdown, with total investments falling from USD 6.4 billion in FY21 to USD 3.7 billion in FY25. MMR and Kolkata accounted for half of the transactions, with shifts in asset preferences toward retail, mixed-use developments, offices, hotels, and data centers. Foreign capital contributed 73% of inflows, with joint domestic-foreign deals on the rise.
Private equity (PE) investments in India's real estate sector fell by 15% year-on-year in the first half of fiscal year 2025-26, reaching USD 2.2 billion compared to USD 2.6 billion during the same period last year, according to a report by Anarock Capital. Despite this overall decline, average deal sizes remained stable, ranging between USD 60 million and USD 100 million. Advertisement
The reduction in PE activity forms part of a larger trend observed over the last few years. Total investments have steadily declined from USD 6.4 billion in FY21 to USD 3.7 billion in FY25. While the first quarter of FY26 initially showed strong deal activity, the pace slowed in the second quarter, reflecting a cautious approach among investors.
The concentration of large transactions has also reduced. In H1 FY26, the top 10 PE deals accounted for 77% of the total investment, down from 93% during the same period last year, indicating a slightly more diversified investment pattern. Geographically, the Mumbai Metropolitan Region (MMR) and Kolkata were the most active hubs, together representing 50% of all PE transactions. MMR's share rose from 12% to 33%, with major deals such as the Kanakia-Hines-Mitsubishi-Sumitomo transaction driving the increase. Kolkata's share increased from zero to 17%, highlighted by Blackstone's acquisition of South City Mall.
Investor preferences showed a notable shift in asset classes. Retail, mixed-use developments, commercial offices, hotels, and data centers gained attention from PE firms, whereas the industrial and logistics sector, which had been dominant in FY25, saw a decline in institutional deals during this period. Equity investments remained the primary mode of funding, making up 78% of total PE investments. Foreign capital continued to play a major role, contributing 73% of inflows, up from 65% in FY25, showing increasing interest from international investors. There was also a rising trend of joint domestic-foreign investments, reflecting collaborative strategies even amid a slow market.
Overall, while the first half of FY26 reflects a moderation in PE activity, stable deal sizes and concentrated activity in key cities indicate that investors are selectively focusing on high-potential opportunities.
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