Mumbai, Dec 28 (NationPress) A recent report indicates that private equity investments in India’s real estate domain are expected to reach approximately $3.5 billion by 2025. This is according to an updated analysis released by Knight Frank India on Sunday.

The report, titled ‘Trends in Private Equity Investments in India: H2 2025’, highlights that investor enthusiasm remained consistent, with funds directed towards sectors that promise stable returns and minimized risks.

In terms of investment allocation, office properties led the charge, securing 58 percent of the overall investments, which translates to $2 billion. This trend underscores robust investor confidence driven by the sector's size, rental consistency, and institutional demand.

Investment levels in office assets have remained relatively stable compared to the three-year average, despite a general slowdown in capital deployment, as noted in the report.

Residential properties ranked as the second most significant beneficiary of private equity investments, making up 17 percent of total inflows in 2025.

Notably, the investment landscape has shifted, with investors favoring structured and credit-based deals rather than traditional equity investments.

There has been a pronounced focus on securing downside protection and ensuring reliable cash flows, with equity involvement largely limited to lower-risk projects with visible execution plans.

The pace of private equity investments has decelerated in 2025, primarily due to discrepancies between capital costs, asset valuations, and exit strategies.

While key macroeconomic indicators such as GDP growth, inflation, and interest rates in India have shown positive trends, these improvements have not aligned swiftly enough to foster aggressive investment behaviors.

Consequently, investors have adopted a selective and cautious approach, prioritizing income-focused strategies over extensive risk capital deployment.

The warehousing sector emerged as the third largest, drawing 15 percent of total private equity investments throughout the year.

The demand for logistics assets remains robust, driven by the expansion of e-commerce, manufacturing, and the formalization of supply chains.

However, the scarcity of stabilized institutional assets and a conservative stance on new developments have constrained investment volumes.

Retail real estate experienced relatively subdued investment activity in 2025, contributing 11 percent to the overall private equity investments, primarily due to a singular large transaction following a prolonged period of diminished interest.

Investors have shown a preference for high-quality retail assets that exhibit strong operational performance and clear exit opportunities, while secondary malls and repositioning options continue to attract limited attention, according to the report.