PE Investments in Indian Real Estate Rise 23% to $2.7 Billion in H1 FY27

Private equity investment in Indian real estate rose 23% year on year to $2.7 billion in the first half of FY27, marking the strongest first-half performance since H1 FY23. The recovery was supported by a sharp increase in domestic capital, larger transactions and growing foreign investor interest in data centres, according to Anarock Research & Advisory.

The investment rebound is significant because it came despite geopolitical uncertainty and elevated global interest rates. H1 FY27 inflows already represented about 63% of the $4.3 billion invested across the entire FY26, putting the Indian real estate market on course for a potentially stronger year if investment momentum continues through the second half.

Key takeaways

• PE investment in Indian real estate reached $2.7 billion in H1 FY27, up 23% YoY.
• The period recorded 30 transactions, compared with 22 in H1 FY26.
• Average deal size increased 18% to $91 million.
• Domestic investors deployed about $1.3 billion across 24 deals, nearly six times the year-earlier level.
• Foreign investors invested around $1.4 billion across six deals, up 19%.
• Offices remained the largest asset class at 35% of total inflows.
• Data centres surged to 29% of PE investment from just 4% in FY26.
• Equity accounted for 83% of inflows, showing stronger investor appetite for ownership positions.
• Multi-city and pan-India transactions accounted for 49% of inflows, up from 18% in FY26.
• If H2 FY27 matches H2 FY26, annual PE inflows could reach about $4.8 billion, according to Anarock.

Why private equity is returning to Indian real estate

The latest numbers suggest that institutional investors are becoming more confident about India’s real estate fundamentals.

Anarock recorded 30 PE transactions during April-September 2026, compared with 22 during the same period a year earlier. At the same time, the average transaction increased 18% to $91 million.

That combination matters.

A rise in deal numbers indicates broader participation, while larger average transactions suggest that investors are willing to commit more capital when they find assets or platforms that meet their return requirements.

Anarock Capital CEO Shobhit Agarwal described H1 FY27 as a turning point, saying investors were increasingly taking equity positions and backing scalable platforms rather than simply testing the market.

The recovery is particularly notable because global interest rates remain relatively high and geopolitical risks continue to influence international capital flows.

India’s relatively strong economic growth, expanding consumption and increasing demand for commercial and digital infrastructure are helping offset those external concerns.

Domestic investors emerge as a major source of capital

One of the biggest changes in the H1 FY27 data is the rapid increase in domestic investment.

Indian investors deployed approximately $1.3 billion across 24 deals, compared with just $220 million across the corresponding period last year.

That represents almost a six-fold increase.

Domestic investors accounted for about 48% of total PE inflows during H1 FY27. Their share was only 16% in FY25, highlighting how quickly the domestic institutional capital pool has expanded.

The change is strategically important for the Indian real estate sector.

Historically, large institutional transactions have relied heavily on global private-equity funds, sovereign wealth funds and other overseas investors. A deeper domestic investor base gives developers and asset owners another source of capital when international flows become more volatile.

It can also make the market more resilient to currency movements and geopolitical shocks.

Anarock Executive Director and Head of Research & Advisory Prashant Thakur said the depth of domestic capital was becoming a structural change rather than simply replacing foreign investment.

Foreign investors are still writing the biggest cheques

The rise of domestic capital does not mean foreign investors are leaving India.

Foreign investors deployed approximately $1.4 billion across six deals during H1 FY27, representing a 19% increase from the year-earlier period.

The important difference was deal size.

Foreign investors committed an average of about $238 million per transaction, compared with approximately $54 million for domestic investors.

In other words, domestic investors generated more transactions, while international investors continued to participate in larger-ticket opportunities.

This suggests that India’s real estate market is developing two complementary pools of capital.

Domestic institutions can provide depth across a larger number of transactions, while international funds remain important for large platforms and specialised assets.

Offices remain the biggest PE destination

Traditional commercial office real estate continues to dominate private-equity allocations.

Office assets attracted 35% of total PE inflows in H1 FY27, only slightly below their 36% share in FY26.

The continued preference for offices reflects investor demand for completed and leased Grade A properties that can generate relatively predictable rental income.

Office demand has also benefited from the expansion of global capability centres, technology operations and other corporate occupiers.

Other institutional research has similarly found that office assets continue to lead India’s real estate investment market, supported by occupier demand, tightening vacancy in major markets and rental growth in premium locations.

For PE investors, the attraction is not necessarily rapid capital appreciation. Stable occupancy and rental income can provide a more predictable investment profile.

Data centres become the new real estate growth story

The sharpest change in the H1 FY27 data came from data centres.

Their share of PE inflows jumped to 29% from only 4% in FY26.

The increase was driven by large-ticket foreign investments in digital-infrastructure platforms.

Data centres are increasingly being treated as a real estate asset class because they require large physical facilities, substantial electricity supply, cooling systems, land and specialised infrastructure.

But their demand drivers are different from conventional commercial property.

The expansion of cloud computing, artificial intelligence, enterprise software and digital services is increasing the amount of computing infrastructure required in India.

Data localisation requirements and rising digital consumption provide additional demand.

AI is particularly important because advanced AI models require large amounts of computing power and associated data-centre capacity.

This helps explain why institutional investors are increasingly looking beyond conventional office buildings.

Hospitality also returns to investor radar

Hospitality accounted for 12% of PE inflows in H1 FY27, despite recording no PE deals in FY26.

That represents another diversification of institutional appetite.

India’s growth in domestic travel, business travel and tourism can support hotel demand, while established hotel assets can provide investors with exposure to operating income and potential asset appreciation.

The return of hospitality investment alongside data centres indicates that PE investors are looking for growth opportunities beyond traditional offices.

Residential attracted 14% of total inflows, while industrial and logistics accounted for 6%.

Retail, however, recorded no PE investment during the period, with Anarock attributing the lack of transactions partly to limited availability of new Grade A mall supply.

Equity investment is replacing debt-led strategies

Another important signal is the composition of PE capital.

Equity accounted for 83% of total inflows in H1 FY27, compared with 77% in FY26 and 68% in FY23.

At the same time, structured debt’s share fell to 16% from 32% in FY23.

This suggests investors are becoming more comfortable taking ownership risk.

Equity investors typically participate more directly in the growth and value creation of an asset or platform. Structured debt, by comparison, provides a lending structure with different risk and return characteristics.

The increasing equity share therefore indicates a stronger willingness to back real estate platforms and development opportunities rather than simply financing projects.

It also aligns with the growing preference for scalable platforms.

Investors increasingly prefer multi-city platforms

Another major change is where investors are deploying capital.

Pan-India and multi-city transactions accounted for 49% of PE inflows in H1 FY27, compared with just 18% in FY26.

That suggests institutional investors are increasingly seeking diversified platforms rather than concentrating capital in individual projects.

A multi-city platform can potentially reduce dependence on a single local property market.

For example, a company operating across Bengaluru, Pune, Mumbai and Delhi-NCR may be less exposed to a slowdown in any one market than a single-city development.

This strategy can also give investors access to multiple demand drivers and allow successful operating models to be replicated across cities.

Bengaluru and Pune gain investor attention

Among individual markets, Bengaluru attracted the largest share of PE inflows at 17%, compared with 13% in FY26.

Pune’s share almost doubled to 11% from 6%.

The two cities benefit from strong technology and corporate ecosystems, growing office demand and expanding infrastructure.

Meanwhile, Mumbai Metropolitan Region and Delhi-NCR saw their combined share decline sharply to 16% from 40% in FY26.

This does not necessarily mean investors are abandoning the two major markets.

Rather, it indicates that capital is becoming more geographically diversified as investors discover opportunities in other cities and across multi-city platforms.

What is driving the shift toward data centres?

Data centres represent a particularly different type of real estate investment because the physical asset is closely tied to technology demand.

A conventional office building primarily depends on companies renting workspace.

A data centre depends on demand for computing, storage and connectivity.

The growth of artificial intelligence adds another layer.

AI workloads require high-performance computing infrastructure, which increases demand for specialised facilities with substantial power and cooling capacity.

Cushman & Wakefield also identified data centres as an increasingly important institutional investment category in India, citing AI adoption, cloud expansion and data localisation as key demand drivers.

This means real estate investors are increasingly participating indirectly in India’s digital-infrastructure expansion.

H1 FY27 could set up a stronger full year

The first-half performance provides a strong starting point for FY27.

India attracted $2.7 billion in real estate PE investment during the first six months, equivalent to roughly 63% of the $4.3 billion invested during all of FY26.

Anarock estimates that if H2 FY27 simply matches the second half of FY26, full-year investment could reach approximately $4.8 billion.

That would make FY27 the strongest year for PE investment in Indian real estate in at least five years.

The calculation is an indicative scenario rather than a forecast guarantee.

Investment volumes can change significantly when one or two large transactions are completed or delayed.

Still, the breadth of the current recovery makes the trend more significant than a single large deal.

REITs could improve the exit environment

The investment environment is also benefiting from a more developed exit ecosystem.

Anarock noted that the listing of a sixth real estate investment trust, or REIT, during H1 FY27 strengthened the potential exit environment for private investors.

REITs can provide institutional investors with a route to monetise mature income-generating assets and recycle capital into new investments.

This matters because PE investors ultimately need both entry opportunities and credible exit routes.

A stronger REIT market can therefore support the broader investment cycle.

Investors can potentially develop or acquire assets, stabilise occupancy and income, and later sell or transfer mature properties into publicly traded vehicles.

What the surge means for India’s real estate sector

The H1 FY27 numbers point to a structural change in the composition of real estate capital.

India is no longer attracting institutional money only for traditional office and residential projects.

Capital is increasingly flowing into digital infrastructure, hospitality, multi-city platforms and other specialised assets.

At the same time, domestic institutional investors are becoming more important.

This could reduce the sector’s dependence on foreign capital while maintaining international participation in large transactions.

The trend also indicates that investors are becoming more selective.

The increase in equity’s share suggests that investors are willing to take risk, but mainly where they see scalable businesses, strong operating platforms or assets supported by long-term demand.

The Bigger Picture

The 23% increase in PE investment is important not simply because India attracted more money, but because where and how that money is being invested is changing.

Offices remain the largest destination, but data centres have emerged as a major institutional asset class. Domestic capital has expanded rapidly, equity has replaced a larger share of structured debt and multi-city platforms are attracting more attention.

Together, these trends suggest that Indian real estate is becoming more institutionalised and increasingly connected to the country’s broader economic and digital-infrastructure growth.

Looking Ahead

The biggest question for H2 FY27 is whether the first-half momentum can continue without relying on a handful of unusually large transactions. Continued domestic capital formation, strong office demand, data-centre expansion and a functioning REIT exit market would support another strong year.

If the current trajectory holds, Indian real estate could enter a new phase in which PE investors increasingly treat the sector as a diversified long-term allocation rather than a collection of individual property bets. The $2.7 billion first-half figure may therefore be less important than the shift in the types of assets and platforms investors are willing to back.