Private equity (PE) investments in India’s real estate sector dropped by 15% year-on-year to $2.2 billion in the first half of FY26, compared to $2.6 billion during the same period last year, according to ANAROCK Capital’s latest FLUX report. The decline comes amid fewer transactions, although average deal sizes and foreign investor participation have remained largely steady, ranging between $60 million and $100 million per deal.
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Slower Momentum Despite a Strong Start
Shobhit Agarwal, CEO of ANAROCK Capital, stated that while Q1 FY26 began on an optimistic note, the momentum didn’t sustain in Q2. “The first quarter offered a glimmer of hope with promising deal flow, but the enthusiasm waned as the second quarter unfolded,” he said.
PE inflows have been gradually cooling over the years — from a peak of $6.4 billion in FY21 to $3.7 billion in FY25, showing a consistent moderation in investor appetite.
From Concentration to Distribution: The Deal Landscape Evolves
A notable trend in H1 FY26 is the reduction in deal concentration. The top 10 PE deals accounted for 77% of total inflows, down from 93% in H1 FY25, indicating a more balanced investment spread across projects.
According to Aashiesh Agarwaal, Senior VP at ANAROCK Capital, “FY25 witnessed an exceptional mega-transaction involving Reliance Group and ADIA-KKR. In contrast, this year’s inflows are more evenly spread across mid-sized deals, reflecting a healthier market balance.”
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Regional Dynamics: MMR Takes the Lead, Kolkata Surges
The Mumbai Metropolitan Region (MMR) emerged as the top investment destination, increasing its share of total PE inflows from 12% in H1 FY25 to 33% in H1 FY26. This surge was primarily driven by the Kanakia-Hines-Mitsubishi-Sumitomo joint transaction, which boosted confidence in the region’s premium commercial and mixed-use assets.
Meanwhile, Kolkata re-entered the spotlight, accounting for 17% of total investments—largely due to the Blackstone acquisition of South City Mall, a deal in which ANAROCK served as the transaction advisor.
Shifting Priorities Across Asset Classes
The FLUX report highlights an interesting realignment of investor focus.
While commercial offices continued to dominate with a 40% share, there was a notable uptick in retail (17%), mixed-use developments (19%), hospitality, and data centres—signalling diversification into segments with high long-term growth potential.
Conversely, the industrial and logistics sector, once a star performer, saw no institutional transactions in H1 FY26, suggesting a temporary pause in investor confidence in that space.
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Equity Dominates, Foreign Capital Rebounds
Equity investments remained the preferred mode of funding, accounting for 78% of total PE deals, while debt-based funding comprised 22%.
Importantly, foreign capital made a strong comeback, climbing to 73% of overall inflows, compared to 65% in FY25. This rebound underscores renewed global confidence in India’s evolving real estate ecosystem, even amid a cooling macroeconomic climate.
Outlook: Stable, Selective, and Quality-Driven Growth Ahead
Despite the apparent slowdown, ANAROCK anticipates a more stable and evenly distributed investment environment for the rest of FY26.
“As developers and investors realign their focus toward quality assets, operational stability, and long-term value creation, we expect deal activity to remain moderate but consistent,” the report stated.
Unless another large-ticket transaction emerges in the second half, the year may close with broader sectoral participation rather than blockbuster deals.
With retail, offices, and data centres continuing to attract interest, analysts believe that India’s real estate sector remains resilient, supported by strong fundamentals, urban demand, and an improving regulatory landscape.
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