Real Estate Tops AIF Investment Chart, Attracts ₹74,000 Crore in First Nine Months of FY2025

The Indian real estate sector has solidified its position as the leading recipient of investments from Alternate Investment Funds (AIFs), drawing in an impressive ₹73,903 crore in net investments during the first nine months of FY2025, according to an insightful report by ANAROCK Research. This marks a significant growth trajectory for real estate, surpassing other sectors to become the top beneficiary of AIF inflows. With this increase, real estate continues to play a pivotal role in India’s economic recovery and growth, especially in the wake of a challenging global economic environment.

Real Estate Dominates AIF Investments

AIFs, which are privately pooled funds, typically invest in high-risk, high-return opportunities across non-traditional assets, such as private equity, hedge funds, venture capital, and real estate. These funds provide alternative investment avenues, attracting both domestic and international capital, making them a powerful tool for financing niche projects that might not receive support from traditional funding sources like banks.

The latest AIF Research Report, compiled using SEBI data, reveals that real estate accounted for the largest share (15%) of cumulative net AIF investments, with ₹73,903 crore allocated to this sector, out of an overall total of ₹5,06,196 crore across all sectors. Other sectors benefiting from AIF investments include IT/ITeS, financial services, non-banking financial companies (NBFCs), banks, pharmaceuticals, FMCG, retail, and renewable energy. However, none of these sectors received as much capital infusion as real estate, underscoring the sector’s strategic importance to the economy.

The data shows that by the end of the first nine months of FY2025, real estate AIF investments rose from ₹68,540 crore at the end of FY2024 to ₹73,903 crore—a robust 8% growth. This positive momentum is expected to continue throughout the remainder of the fiscal year, driven by the sector’s ongoing recovery and strong demand for housing.

Prashant Thakur, Regional Director and Head of Research at ANAROCK Group, highlighted that AIFs have proven to be a critical financial mechanism, especially in addressing the capital gaps faced by real estate developers. “Amidst increasing constraints on traditional funding sources, AIFs are an agile and innovative financing tool to fill capital gaps at various stages of real estate development,” Thakur explained. “With both domestic and foreign investors pooling capital, AIFs are creating a scalable and sustainable funding ecosystem that is expected to grow further as the market evolves.”

SWAMIH Fund: Reviving Stalled Housing Projects

One of the most notable contributors to the resurgence of India’s real estate sector is the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, which has injected over ₹35,000 crore into the real estate market. SWAMIH, a government-backed AIF, was established to help revive stalled housing projects across the country, providing liquidity and ensuring the completion of homes for countless homebuyers.

Anuj Puri, Chairman of ANAROCK Group, emphasized the immense value of the SWAMIH Fund in stabilizing the housing market. “The SWAMIH Fund has been a game-changer, facilitating the completion of thousands of housing units, which has brought much-needed stability to the residential real estate market,” he said. “This fund has been an unmitigated boon for homebuyers, allowing many to realize their dream of owning a home.”

However, Puri also pointed out that the fund’s progress has been hampered by several challenges. “Despite the SWAMIH Fund’s successes, it faces an uphill battle against regulatory delays, lender resistance, and cash flow constraints. These systemic issues need to be addressed for the fund to realize its full potential,” he added.

Puri further stressed that while capital infusion is crucial, the resolution of these challenges will be essential for alleviating India’s stalled housing crisis. “Addressing regulatory bottlenecks and removing impediments to cash flow can unlock the full power of the SWAMIH Fund, enabling it to bridge the gap between distressed homebuyers and unfinished housing projects,” he concluded.

The Future of AIF Investments in Real Estate

Looking ahead, experts believe that AIFs will continue to be a crucial driver of capital flow into the Indian real estate sector. As traditional funding sources remain constrained, the flexibility of AIFs in supporting diverse projects will become even more valuable. With the integration of advanced technologies like AI-driven risk assessments and blended finance models, AIFs are poised to further enhance their impact on the real estate landscape.

India’s real estate sector, backed by strong AIF investments and initiatives like the SWAMIH Fund, appears well-positioned to navigate the challenges of the coming years. By overcoming the bottlenecks that have historically plagued housing development, the sector can unlock its full potential and continue to be a major contributor to India’s economic growth.