Mumbai: Private equity (PE) investments in India’s real estate sector fell 15% year-on-year in the first half of FY26, according to the latest ANAROCK Capital Flux report. Despite the decline in transaction volumes, average deal sizes remained steady in the USD 60–100 million range.
The ANAROCK Capital Flux report noted that India’s real estate PE inflows have been consistently moderating, dropping from USD 6.4 billion in FY21 to USD 3.7 billion in FY25. The first half of FY26 registered USD 2.2 billion in total PE inflows, underscoring subdued investor sentiment.
ANAROCK Capital Flux: Declining Deal Volume Drives Lower Activity
Shobhit Agarwal, CEO – ANAROCK Capital, said, “A stronger showing in Q1 FY26 offered a brief positive signal, but activity slowed again in the second quarter. While H1 FY26 shows USD 2.2 billion in inflows, it is still 15% lower year-on-year.”
The ANAROCK Capital Flux report attributes the drop primarily to a lower number of transactions, even as the average deal size held firm. The top 10 PE deals accounted for 77% of the total in H1 FY26, down from 93% in the same period last year, suggesting a broader spread of capital across deals.
Regional and Asset Class Shifts Highlight Market Evolution
The ANAROCK Capital Flux study highlights that the Mumbai Metropolitan Region (MMR) and Kolkata have emerged as active hubs, with their share of deal activity increasing sharply to 33% and 17%, respectively. Conversely, pan-India or multi-city deals dropped from 51% to 7%.
Retail, mixed-use, commercial offices, hotels, and data centres have become preferred asset classes, while industrial and logistics sectors saw no institutional transactions during H1 FY26.
Equity and Foreign Capital Dominate PE Landscape
Equity deals constituted 78% of all PE investments during the period, maintaining a consistent trend with previous years. The share of foreign capital rose to 73%, rebounding from 65% in FY25. ANAROCK noted a growing trend of joint investments between domestic and international players, indicating rising collaboration despite overall market softness.
ANAROCK Capital Flux: Sectoral Insights Across Real Estate Segments
- Residential: The residential segment entered a consolidation phase, with launches and new sales moderating. Investor sentiment, however, remained positive, supported by India’s economic growth and sector formalization.
- Commercial: Leasing momentum continued to strengthen, led by GCCs and co-working operators. The commercial segment attracted USD 869 million in investments during H1 FY26—more than double the average of the previous three half-year periods.
- Industrial & Logistics: The segment saw no institutional transactions during the review period, though investor interest remains robust for quality assets backed by India’s e-commerce and 3PL growth.
- Retail: Retail assets continued to perform strongly, driven by healthy operating metrics. Notable deals included transactions by Nexus Select and Blackstone, with ANAROCK acting as transaction advisor in the South City Mall deal.
- REITs: India’s REIT market showed strong resilience, with listed REITs gaining 15–27% in value and maintaining stable yields of 5–6%. H1 FY26 also saw the successful listing of the fifth Indian REIT—Knowledge Realty Trust—oversubscribed 12.5 times. SEBI’s reclassification of REITs as equities further bolstered investor confidence.
Outlook Remains Optimistic Despite Short-Term Slowdown
While the overall PE momentum in real estate remains subdued, ANAROCK Capital expects steady investor participation in key segments like commercial, retail, and REITs.
The evolving asset mix and rising domestic-foreign collaboration are likely to shape the next growth cycle for Indian real estate investments.
