Private equity investments in India's real estate sector rose to $6.7 billion in 2025, reflecting a 59 percent year-on-year surge, largely fueled by strong inflows from overseas institutional investors. Foreign investors accounted for around 76 percent of total inflows, while office assets emerged as the biggest investment magnet, according to a market report.

The office segment attracted $2.4 billion, supported by stable leasing activity and sustained long-term demand visibility. Data centres and residential assets followed as the next-strongest categories. The report also projected that inflows are likely to remain steady in 2026, in the range of $6.5 billion to $7.5 billion, with office assets in key urban markets expected to continue leading capital deployment.

The report noted that private equity investments in the sector have now returned to pre-pandemic levels, reflecting an improvement in market fundamentals over the last few years. Stronger regulatory oversight, better financial discipline among developers, and increased emphasis on asset-level performance have contributed to renewed investor confidence.

The study clarified that the figures include institutional private equity transactions executed through private channels, and exclude debt raises, public market deals, QIPs, and platform-level fundraising.

Across asset classes, office properties accounted for 35.3 percent of total private equity inflows in 2025, retaining their position as the largest investment category. Data centres emerged as the second-largest recipient with a 23.2 percent share, while residential assets captured 21 percent.

Industrial and logistics assets represented 9 percent of the inflows, followed by retail at 6 percent and hospitality at 5 percent. Co-living and student housing remained small but emerging segments, together contributing just 0.5 percent of total investments.

The report highlighted that while office investments were backed by consistent leasing traction and steady occupier demand, investments into data centres were entirely foreign-led, reflecting growing global interest in India's expanding digital infrastructure ecosystem. Residential investments, meanwhile, saw balanced participation from both domestic and international investors, supported by strong demand in premium and luxury housing.

Capital deployment, the report added, is increasingly moving toward income-generating assets such as offices, logistics parks, industrial developments, and data centres.

Land continued to remain an important investment avenue, accounting for nearly one-fourth of total equity inflows during the year. More than 60 percent of land-related investments were directed toward office and data centre development pipelines, underscoring investor preference for future-ready, revenue-generating platforms.

Other segments such as industrial and logistics, retail, hospitality, co-living and student housing also witnessed selective participation, as investors gradually diversified portfolios while remaining cautious about execution timelines and exit visibility.

Looking ahead, the report expects private equity inflows into Indian real estate to remain stable in 2026, with projected investments between $6.5 billion and $7.5 billion. Office assets in core business districts are likely to continue drawing institutional capital, while industrial and logistics parks may benefit from manufacturing growth, supply-chain diversification and the shift towards organized warehousing.

Data centres are expected to maintain strong investor momentum on the back of rising digital adoption, cloud storage expansion and long-term capacity needs. The residential segment is also likely to see continued participation, driven by premium and luxury housing demand. Alternative segments including senior living, co-living, student housing and life sciences are expected to gradually scale up from a smaller base.

The report further noted that the increasing adoption of REITs in India is reshaping the investment landscape by enhancing exit visibility and strengthening institutional participation across asset classes.