Blackstone, CapitaLand Lead Q1 Realty PE Inflows Amid FY25 Slowdown

Q1 2025 Sees 35% YoY Growth Led by Residential and Institutional Interest

Private equity (PE) investment into India’s real estate sector surged 35% year-on-year (YoY) to $748 million during the January–March quarter of 2025, driven by notable deals from Blackstone and CapitaLand India Trust, according to a report by property consultancy Savills India. The spike marks a notable quarterly resurgence despite a broader, longer-term contraction in annual inflows. Over a five-year period, PE investment in Indian real estate has dropped by 43%, underlining persistent headwinds from global economic and geopolitical volatility.

The largest highlight of the quarter was Blackstone’s $135 million initial investment in Kolte Patil Developers, marking its first major foray into Indian residential realty. Parallelly, CapitaLand India Trust, backed by Singapore’s sovereign fund Temasek, infused $171 million into a mixed-use project by MAIA Estates in Bengaluru’s Hebbal area. This wave of residential-focused activity defied traditional preferences for commercial assets, with the residential segment capturing 51% of the total Q1 inflows.

“While 2024 showed gradual recovery in PE inflows, Q1 2025 has marked a decisive upward trajectory, especially in residential realty. The Asia-Pacific region contributed 53% of foreign capital, reflecting increasing Asian institutional interest,” said Arvind Nandan, MD, Research and Consulting, Savills India.

Highlights:

• Q1 FY25 PE inflows rose 35% YoY to $748 million.

• Blackstone’s Kolte Patil deal and CapitaLand’s Bengaluru project led the quarter.

• Residential real estate dominated with a 51% share in Q1.

• Asia-Pacific region accounted for 53% of foreign PE inflows.

Annual PE Inflows Flat in FY25, Long-Term Trend Signals Strategic Capital Deployment

Despite the momentum in Q1, overall PE investment in Indian real estate remained flat in FY25 at $3.7 billion, identical to FY24 figures but significantly lower than the $6.4 billion peak recorded in FY21, according to a report by Anarock Capital. The year was largely defined by big-ticket strategic deals, including the $1.5 billion investment by Abu Dhabi Investment Authority (ADIA) and KKR in Reliance Retail Ventures’ warehousing business.

Other major transactions included:

• GIC and Xander investing $258 million in Shapoorji Pallonji Real Estate.

• Keppel Land’s $251 million infusion into RMZ Corp and CPPIB.

• Alpha Wave Global’s $145 million acquisition of a 22% stake in a joint venture with Oberoi Realty.

Anarock noted a structural shift in investor behavior. The number of PE deals fell from 51 in FY24 to 39 in FY25, but average deal size rose from $75 million to $94 million, highlighting more selective and strategic deployments, often targeting multi-city, pan-India platforms.

Shobhit Agarwal, MD and CEO of Anarock Capital, observed, “The decline in aggregate flows stems from waning foreign investor activity, influenced by heightened global macroeconomic uncertainty and geopolitical instability. However, the rise in deal sizes shows deeper confidence in select developers and realty platforms.”

Highlights:

• FY25 PE inflows stayed flat YoY at $3.7 billion.

• Investments remain 43% lower than FY21’s $6.4 billion high.

• Deal count dropped to 39, but average size rose to $94 million.

• Major FY25 deals included Reliance Retail, Shapoorji Pallonji, RMZ Corp, and Oberoi Realty ventures.