According to Knight Frank India, private equity investments in Indian real estate decreased by 29% year over year in 2025, although investor interest remained anchored by office assets.
Office Assets Continue to Anchor Investor Interest
Even though total real estate investments were USD 3.5 billion, office real estate drew more than USD 2 billion in PE investments during the year, making up 58% of total inflows.
Despite a wider global reevaluation of risk, returns, and execution, office investment volumes remained largely in line with the three-year average, according to Knight Frank India’s most recent report, “Trends in Private Equity Investments in India: H2 2025”, highlighting ongoing investor conviction.
Cautious Investment Environment in 2025
Private equity investors continued to exercise caution in 2025, according to Mumbai-based Knight Frank India, as the market experienced a “sharp recalibration across three interrelated dimensions – the effective cost of capital, exit visibility, and valuation alignment”.
Macroeconomic indicators like GDP growth, inflation, and interest rates improved, but they “failed to realign rapidly enough to enable continued capital deployment”, according to the research.
Residential and Credit-Led Investment Trends
With 17% of all inflows, residential real estate turned out to be the second-largest receiver of PE investments.
Nonetheless, Knight Frank noted that investors were favoring “credit-led products over pure equity exposure”, indicating a shift in the nature of capital deployment across the sector.
Warehousing and Retail Show Selective Growth
The third-largest segment, warehousing, attracted 15% of PE investments in 2025 because to strong occupier demand brought on by the rise of manufacturing, supply-chain formalization, and e-commerce.
Conversely, just 11% of investments were made in retail real estate, and funds were only allocated to properties that satisfied “tight criteria on scale, operating performance, and exit visibility”.
Outlook for Private Equity Investments in 2026
“Knight Frank’s investment forecasting methodology speaks to a more supportive climate over the medium term”, stated Shishir Baijal, International Partner, Chairman, and Managing Director of Knight Frank India.
Private equity investments in Indian real estate are expected to increase by 28% annually to roughly USD 4.4 billion in 2026, based on predictions about government capital spending, currency movement, inflation, interest rates, and additional office supply. Selective growth, rather than a wide-ranging return of risk capital, is anticipated to be the driving force behind this rebound.
