Real Estate Leads AIF Investments In H1 FY2025, Says Anarock Research

Real estate continued to lead the way in alternative investment fund (AIF) investments in H1 FY2025, attracting Rs 75,468 crore, or 17 per cent of the total Rs 4,49,384 crore invested across all sectors.

Though AIF investments are also being made in a number of other industries, including IT/ITeS, financial services, non-banking financial companies (NBFCs), banks, pharmaceuticals, FMCG, retail, and renewable energy, the amount is significantly smaller. For instance, after real estate, IT/ITeS attracted the second-largest chunk of investment at only 27,815 crore, almost a third of the amount garnered by real estate, real estate consultancy Anarock Research said, citing data from the Securities and Exchange Board of India (Sebi).

Anuj Puri, chairman of Anarock Group, said, “By the end of H1 FY2025, AIF investments in real estate have grown from Rs 68,540 crore at the close of FY2024 to Rs 75,468 crore, marking a robust 10 per cent increase in just six months.”

AIF Sector Witnesses Substantial Growth

With a sharp increase in the number of funds and investment commitments, the AIF industry in India has grown dramatically in recent years. According to Anarock, AIF commitments have surged by over 340 per cent in the past six years, from Rs 2,82,148 crore in FY2019 to Rs 12,43,083 crore in H1 FY2025, reflecting the increasing demand for alternative investment options.

From FY2013 to FY2024, the compound annual growth rate (CAGR) of AIF commitments stood at an impressive 83.4 per cent, underscoring the sector’s growing role in India’s overall investment landscape.

Puri added: “A deep dive into the data reveals that the surge in AIF activity is largely driven by Category II AIFs, which include a mix of real estate funds, private equity, debt funds, and fund of funds (FoFs). The data indicates that over the last five years, Category II AIFs have been responsible for nearly 80 per cent of total AIF commitments, highlighting the dominance of these flexible and tailored investment vehicles.”

While domestic investors have historically made up the bulk of AIF investments, foreign portfolio investors (FPIs) are increasingly getting involved, particularly in Category II AIFs, where their contribution is now almost on par with that of domestic investors.

A key trend in the AIF sector is the increased reliance on equity financing, particularly in real estate, to support projects requiring substantial working capital.

Over 1.36 Million Units Launched In Top-Seven Cities

According to another set of real estate data shared by Anarock Research, over 1.36 million housing units were launched in the top-seven cities from 2021 to September 2024, while approximately 1.44 million units were sold in the same period. Despite the influx of new housing supply, unsold inventory has decreased by more than 10 per cent, driven by sustained demand.