Indian Realty Sees Major PE Surge, Domestic Capital Nears Foreign Investment Levels

Private equity investment in Indian real estate surged an impressive 23% year-on-year to reach $2.7 billion in the first half of fiscal year 2027 (H1 FY27), marking the strongest first-half performance since H1 FY23. This boom, driven significantly by domestic capital, signals a 'clear turning point' for the sector, with investors committing larger sums and backing scalable platforms despite a challenging global economic backdrop. The standout trend is the dramatic rise of domestic investors, who deployed approximately $1.3 billion across 24 deals, nearly six times the amount invested in H1 FY26. This means domestic capital now accounts for 48% of total PE inflows, a significant jump from just 16% in FY25, almost matching the $1.43 billion from foreign investors. While foreign investors continue to write larger individual cheques, the depth of domestic capital is creating a more resilient market. The office sector still leads, attracting 35% of total investments, but data centers have rapidly emerged as a new darling, drawing 29% of inflows, a sharp increase from just 4% in FY26, highlighting a shift towards new-age assets. Looking ahead, if private equity inflows in H2 FY27 match those of H2 FY26, total investment for the fiscal year could hit $4.8 billion, potentially the highest in at least five years. The listing of a sixth Real Estate Investment Trust (REIT) during the half has further deepened the market, offering private investors stronger exit routes. Experts anticipate continued momentum driven by strong office leasing, rising data center demand, and healthy hotel performance, with the sustainability of domestic investment at over $1 billion per half being a key indicator for a potentially record-breaking year.