Office leads private equity inflows in 2025; overall real estate investment at USD 3.5 billion: Knight Frank India
New Delhi [India]: Private equity investments in real estate in India slowed down, falling 29 percent year-on-year in 2025, according to Knight Frank India, but office assets continued to attract investor interest.
Although overall real estate investments stood at US$3.5 billion, office real estate attracted more than US$2 billion in PE investment during the year, accounting for 58 percent of total inflows.
Knight Frank India, in its latest report titled ‘Trends in Private Equity Investments in India: 2H 2025’, highlighted that office investment volumes remain broadly in line with the three-year average and investor confidence continues despite a broader global reassessment of risk, return and execution.
Mumbai-based Knight Frank India said private equity investors are remaining cautious in 2025 as the market undergoes a “sharp recalibration across three interconnected dimensions – effective cost of capital, exit visibility and valuation alignment.”
While macroeconomic conditions such as GDP growth, interest rates and inflation have improved, these factors “are not realigning quickly enough to support sustainable capital allocation,” the report said.
Residential real estate emerged as the second largest recipient of PE investments, accounting for 17 percent of total inflows.
But Knight Frank has observed a change in the nature of capital allocation, with investors increasingly choosing “credit-focused instruments over pure equity risk.”
Warehousing was the third largest segment attracting 15 percent of PE investments in 2025, supported by strong user demand driven by e-commerce expansion, supply chain formalization and growth in manufacturing.
By contrast, retail real estate saw limited activity, with only 11 percent of investments generated and capital deployed only to assets that met “strict criteria for scale, operating performance and exit visibility.”
Commenting on the outlook, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said: “Knight Frank’s investment forecast model points to a more supportive environment in the medium term. Based on assumptions on government capital expenditure, currency movement, inflation, interest rates and growing office supply, private equity investments in real estate in India are projected to grow 28 per cent annually to reach around $4.4 billion by 2026. Growth rather than broad-based return on venture capital.”
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