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The private equity (PE) market in Indian real estate showed notable shifts in the first nine months of FY25. While the number of PE deals fell from 30 to 24 compared to the same period in FY24, the total investment value rose by 6% to USD 2.82 billion, thanks to a landmark USD 1.54 billion warehousing deal involving Reliance-ADIA/KKR. This deal boosted the logistics and warehousing sector, which accounted for 62% of total investments. Multi-city transactions dominated, with Bengaluru and Hyderabad emerging as key cities. The industrial and logistics segment saw robust growth, while the office and residential sectors faced challenges due to geopolitical concerns and high interest rates.
The Indian real estate private equity (PE) market in the first nine months of FY25 saw significant developments despite a drop in deal numbers. According to a report by Anarock Capital, the total investment value rose by 6%, reaching USD 2.82 billion, even as the number of PE deals decreased from 30 in the same period last year to 24. This growth was largely driven by a prominent USD 1.54 billion warehousing deal involving Reliance, ADIA, and KKR. Advertisement
This transaction, along with a USD 204 million equity deal between Blackstone and LOGOS, contributed substantially to the logistics and warehousing sector, which captured 62% of the total investments during the period. Shobhit Agarwal noted that these deals were instrumental in boosting the sector, which has become a major draw for investors.
The hybrid nature of the Reliance-ADIA/KKR deal made hybrid transactions the largest contributor to the investment landscape, accounting for 55% of total transactions. Debt and equity transactions made up 24% and 21%, respectively. Multi-city deals dominated, largely due to the Reliance-ADIA/KKR deal and two other significant multi-city transactions, bringing the total to over 62%.
Among cities, Bengaluru and Hyderabad led the charts, accounting for 11% and 10% of deal shares, respectively. However, traditional debt and equity deals remained relatively limited, with the hybrid Reliance-ADIA/KKR deal continuing to overshadow others in terms of size and impact.
The industrial and logistics sector emerged as the top-performing segment, drawing 62% of total PE investments. In contrast, the office and residential sectors lagged, attracting only 14% and 15% of investments, respectively. High interest rates and geopolitical concerns tempered activity in the office segment, despite strong leasing performance. Analysts suggest that an anticipated drop in interest rates may revive investor interest in this space in the near future.
Investor enthusiasm for industrial and logistics properties remains robust, driven by manufacturing growth, rising e-commerce demand, and the expansion of third-party logistics (3PL) services. The trend of shifting from Grade-B to Grade-A properties reflects a heightened focus on quality, larger formats, and ESG compliance. Institutional investors and high-net-worth individuals continue to show strong interest, bolstered by the steady availability of investment-grade properties and sustained demand for warehouses. Foreign and domestic investors maintained similar funding proportions to previous years, underlining the consistent appeal of India's real estate market.
The private equity landscape in Indian real estate is evolving, with a noticeable tilt towards hybrid and multi-city deals. The industrial and logistics sector remains the standout performer, supported by growing manufacturing, e-commerce, and 3PL services. While office and residential sectors face hurdles due to geopolitical factors and high interest rates, a potential reduction in borrowing costs could reinvigorate investments. The shift towards high-quality, sustainable properties signals a maturing market, drawing continued interest from both institutional and individual investors. Overall, India's real estate market demonstrates resilience and adaptability in the face of changing economic dynamics.
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