Investment Surge in India: AIFs Allocate ₹5 Lakh Crore, Real Estate at the Forefront

Synopsis

The real estate sector in India has seen an influx of investments from alternate investment funds (AIFs), totaling ₹73,903 crore in the first nine months of FY25. This highlights the sector's growing significance in India's financial landscape.

Key Takeaways

Real estate leads AIF net investments with ₹73,903 crore.
AIFs are crucial for experienced investors seeking high-risk opportunities.
Significant growth in AIFs from 42 to 1,524 in ten years.
Category II AIFs account for 80% of recent commitments.
Domestic and foreign investors show balanced participation in AIFs.

Mumbai, April 21 (NationPress) The real estate sector in India has emerged as the frontrunner in terms of net investments from alternate investment funds (AIFs), having garnered ₹73,903 crore over the first nine months of FY25, according to a report released on Monday.

AIFs are specialized funds that pool investments to target non-conventional assets such as private equity, hedge funds, and real estate, providing a unique mix of high-risk and high-reward opportunities for seasoned investors.

As reported by Anarock Research, the real estate sector represents the largest segment, constituting 15 percent of total net AIF investments, with ₹73,903 crore allocated specifically to real estate out of a total of ₹5,06,196 crore across all sectors during the April-December timeframe of FY25.

Other sectors reaping the benefits of AIF investments include IT/ITeS, Financial Services, NBFCs, Banks, Pharma, FMCG, Retail, Renewable Energy, and more.

“By the conclusion of the first three quarters of FY25, investments in real estate through AIFs increased from ₹68,540 crore at the end of FY2024 to ₹73,903 crore, marking a significant 8 percent growth. This momentum is expected to continue,” the report stated.

The number of AIFs operating in the market has expanded dramatically, increasing from 42 on March 31, 2013, to 1,524 as of March 5, 2025, with capital commitments growing five-fold since 2019.

Between FY13 and FY25, these commitments have showcased an impressive 83.4 percent compounded annual growth rate (CAGR).

“Given the increasing limitations on traditional funding sources, AIFs serve as a flexible and innovative funding mechanism capable of bridging capital shortfalls at various stages of real estate development. By pooling funds from both domestic and international investors, AIFs create a sustainable and scalable funding ecosystem,” remarked Prashant Thakur, Regional Director and Head of Research at Anarock Group.

Looking ahead, the implementation of blended finance models, AI-enhanced risk evaluations, and simplified regulatory frameworks will further amplify the effectiveness of AIFs, he added.

This notable rise in commitments is primarily driven by Category II AIFs, which have contributed nearly 80 percent over the past five fiscal years.

While domestic investors maintain a dominant position in AIF fundraising, Category II AIFs show a significant balance with foreign portfolio investors (FPIs) participating nearly equally, as noted in the report.