India’s real estate sector saw a modest contraction in total deal value during the first half of 2025, despite a visible increase in the number of transactions, according to professional services firm Grant Thornton Bharat. The latest edition of its biannual report, Real Estate Q2 2025 Dealtracker, reveals that while 45 transactions were recorded between January and June 2025—an increase from 40 during the same period last year, the cumulative deal value dropped by 8% year-on-year, from $2.7 billion in H1 2024 to $2.5 billion in H1 2025.
The dip in overall deal value, despite the rise in deal count, points to a shift in deal composition, smaller ticket sizes, higher volumes, and possibly more strategic or consolidation-focused activity rather than mega deals that had characterised earlier growth phases.
The second quarter (April–June 2025) contributed significantly to the half-year tally, with 17 transactions accounting for $1.3 billion—just over 50% of the total value recorded in the first six months. These deals included a combination of Initial Public Offerings (IPOs), Qualified Institutional Placements (QIPs), mergers and acquisitions, and private equity transactions.
Notably, IPO and QIP activity accounted for a substantial portion of the total deal value, reflecting growing confidence in public capital markets as a fundraising avenue for real estate players. Companies across co-working, commercial leasing, and integrated development platforms have increasingly turned to equity markets amid a gradual recovery in office occupancy rates and a stabilisation of residential sales.
Market Trends and Implications
While the reduction in deal value might initially seem like a sign of weakening investor interest, the report suggests it reflects more cautious capital deployment, valuation discipline, and a preference for capital-light business models. Large institutional investors and global funds are now focusing on platform-level investments, structured joint ventures, and development partnerships rather than outright acquisitions or single-asset purchases.
One of the key segments contributing to deal activity is commercial office real estate, which has seen a resurgence in both leasing and investment. India recorded its highest-ever office leasing volume in H1 2025, touching 48.9 million square feet across major metros, according to parallel industry data. This surge is being driven by Global Capability Centers (GCCs), IT/ITES companies, and growing demand for flexible workspace solutions.
The co-working segment, in particular, has gained traction among investors, as evidenced by recent IPO developments. Smartworks Coworking Spaces Ltd’s ₹583 crore public issue was oversubscribed multiple times earlier this month. WeWork India has also received SEBI’s approval for an Offer for Sale (OFS), allowing promoters to monetise their stakes amid rising occupier demand in Tier 1 cities.
Residential real estate and industrial/logistics segments continue to attract capital, though the structure of these deals often involves staggered commitments or land-swap mechanisms, keeping immediate transaction values lower. Moreover, developers are focusing on balance sheet repair, debt reduction, and calibrated expansion—factors that align more with moderate, long-term growth than high-value acquisitions.
Investment Outlook
The 8% decline in overall deal value, while notable, is not necessarily indicative of weakening sector fundamentals. Rather, it points to an evolving investment approach. Factors such as interest rate volatility, geopolitical concerns, inflation control measures, and tightening regulatory oversight have made investors more selective and focused on sustainable returns over quick scale-ups.
Grant Thornton Bharat’s report suggests that activity in the second half of 2025 could rebound in value terms, particularly if a few delayed large-ticket deals in REITs and integrated township platforms close within the next two quarters. Additionally, the expected listing of more office and warehousing REITs, along with continued IPO activity from asset-light operators, could contribute to a more balanced mix of volume and value in H2 2025.
The findings from the Real Estate Q2 2025 Dealtracker indicate a maturing real estate investment environment in India, marked by higher deal volume, diversified deal types, and cautious but steady capital flows. While the decline in total transaction value might seem concerning in isolation, it reflects a broader strategic shift toward sustainable asset growth, operational efficiency, and long-term capital partnerships.
Stakeholders across real estate, capital markets, and investment banking will be closely monitoring the trend in H2 2025, particularly the performance of listed platforms, execution of pipeline deals, and capital inflows into development partnerships. As the sector transitions from post-pandemic recovery to long-term repositioning, investor focus will likely remain on stability, compliance, and real asset performance over speculative returns.
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