Private Equity Investments In Real Estate Down 29% This Year: Knight Frank

Private equity investments in real estate fell 29% this year to $3.46 billion due to lower inflow of funds in housing and warehousing projects, according to Knight Frank India.

Private equity investments stood at $4.9 billion during the preceding year.

Inflow of PE funds hit record $6.73 billion during the 2018 calendar year.

Real estate consultant Knight Frank India in an analysis released on Sunday noted that investors remained cautious this year.

Among different asset classes, the data showed that the PE fund inflow in office assets rose to $2 billion during this calendar year from $1.85 billion in 2024.

Office assets attracted 58% of the total inflows in 2025.

Retail real estate also garnered $374 million this year as against nil inflow during 2024.

However, PE investments fell sharply in housing and warehousing assets.

Housing segment attracted $576 million this year as against $1,177 million in 2024.

The inflow of funds in warehousing parks plunged to $510 million in 2025 from $1,877 million in the preceding year.

"The slowdown in private equity investments in Indian real estate during 2025, reflects a sharp recalibration across three interconnected dimensions, the effective cost of capital, exit visibility, and valuation alignment," the consultant observed.

The PE investments declined despite improvement in macro-economic conditions (GDP growth, interest rate and inflation), Knight Frank said, adding that these three variables failed to realign quickly enough to support sustained capital deployment.

On the outlook, Knight Frank Chairman and Managing Director Shishir Baijal said the PE investments in 2026 could rise 28 per cent to USD 4.4 billion.

"This recovery is expected to be measured, driven by selective growth rather than a broad-based return of risk capital," he added.

Knight Frank said the analysis does not include REITs, InvITs, hospitality and data centre transactions.