M
umbai: Private equity investments continue to fuel India's real estate sector through alternate investment funds (AIFs). In the first nine months of this year, the sector saw Rs 28,560 Cr raised, accounting for 17% of total sectoral investments. A major trend within AIFs is their growing reliance on equity financing to bridge funding gaps in real estate projects.

    These funds offer customized capital stacks that address unique developer needs, from construction to long-term project financing. According to Anarock Property Consultants' analysis of Sebi data, by the end of H1 FY25, total investments via AIFs rose 10% to Rs 75,468 Cr, a significant growth in just half the financial year.

    Category II AIFs, including real estate funds and private equity, drive this surge. They have been responsible for nearly 80% of total AIF commitments over the last five years, highlighting their dominance as flexible investment vehicles. Traditionally, domestic investors funded AIFs, but foreign portfolio investors are increasingly participating, especially in Category II AIFs.

    Real estate comprised the highest share of AIF investments at 17%, while other sectors benefiting from these funds include IT/ITeS, financial services, and renewable energy. The total AIF investment across various sectors reached Rs 4,49,384 crore by H1 FY2025, with a compound annual growth rate (CAGR) of 83.4% between FY2013 to FY2024.