by THO
Alternative Investment Funds have invested close to ₹75,468 crore in the real estate sector over the last decade. This is almost 17% share of the amount invested by AIFs across sectors such as IT/ITeS, financial services, NBFCs, banks, pharma, FMCG, retail, renewable energy, and others.
Latest SEBI data compiled by ANAROCK Research indicates that out of a total of ₹4,49,384 crore AIF investments made across sectors till H1 FY2025, real estate’s share was the highest at 17% – totalling nearly ₹75,468 crore, an analysis by Anarock has shown.
In the first nine months of CY24 alone, the real estate sector saw ₹28,560 crore raised through private equity investments, according to ANAROCK Capital. Real estate accounted for 17% of total sectoral investments this year. ₹12,801 crore were also raised via Qualified Institutional Placements (QIPs) within the same period – again, the second highest among all the major sectors and comprising a 17% overall share, it showed.
“By the end of H1 FY25, total investments in the real estate sector via AIFs have risen from ₹68,540 crore by FY 2024-end to ₹75,468 crore. This is a significant10% growth in just half the financial year,” said Anuj Puri, chairman – ANAROCK Group.
Also Read: Equity investments in real estate sector to surpass $10 billion in 2024: CBRE-CII report
AIF in India has seen substantial increase in the number of funds available for investment. AIFs’ overall commitment rose by over 340% in the last six years – from ₹2,82,148 crore in FY 2019 to ₹12,43,083 crore in H1 FY2025, reflecting increasing appetite for alternative investment strategies, it showed.
Between FY2013 to FY2024, the commitment raised in the AIF sector has maintained an impressive 83.4% compound annual growth rate (CAGR), signaling its growing importance in the broader investment landscape, it said.
“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 (FoF),” says Puri. “The data indicates that over the last five years, Category II AIFs have been responsible for nearly 80% of total AIF commitments, highlighting the dominance of these flexible and tailored investment vehicles.”
Domestic and foreign portfolio investors primary source of AIF funding
Traditionally, domestic investors have been the primary source of AIF funding. However, foreign portfolio investors (FPIs) are also stepping up, especially in the case of Category II AIFs. In this category, FPIs now have an almost equal participation alongside domestic investors.
A major trend within AIFs is the growing reliance on equity financing to bridge gaps in the real estate sector. With many real estate projects requiring significant working capital throughout their lifecycle, AIFs have provided a vital source of funding. These funds offer a customized capital stack that addresses the unique needs of real estate developers, helping to manage everything from construction to long-term project financing, it said.
