Realty Leads AIF Investments with Rs 73,903 Crore Infusion in 9MFY25

India’s real estate sector has emerged as the top recipient of Alternate Investment Fund (AIF) inflows during the first nine months of the financial year 2024-25 (9MFY25), attracting Rs 73,903 crore the highest among all sectors, according to a report by Anarock.

Real estate accounted for 15% of the total Rs 5.06 trillion AIF investments made across sectors between April and December 2024. The sector saw an 8% increase in AIF infusion from Rs 68,540 crore at FY24-end to Rs 73,903 crore by December 2024.

AIFs are privately pooled investment vehicles that target non-traditional asset classes such as private equity, hedge funds, and real estate. They cater primarily to experienced investors seeking high-risk, high-return opportunities, and play a critical role in financing sectors with limited access to traditional funding.

"Amidst increasing constraints on conventional funding channels, AIFs have become agile and innovative financing mechanisms capable of plugging capital gaps in real estate development", said Prashant Thakur, Regional Director & Head of Research, Anarock Group. "Their ability to draw both domestic and international capital makes AIFs a scalable and sustainable financing ecosystem".

Following real estate, the IT/ITeS sector received Rs 30,279 crore in AIF investments, while financial services, NBFCs, and banks attracted Rs 26,807 crore, Rs 21,929 crore, and Rs 21,273 crore, respectively. Pharma and FMCG sectors garnered Rs 18,309 crore and Rs 12,743 crore, while retail and renewable energy attracted Rs 11,550 crore and Rs 11,433 crore.

AIF activity has surged dramatically over the last decade. The number of active AIFs rose from 42 in March 2013 to 1,524 as of March 2025 a 36-fold increase. Commitments raised through AIFs have increased fivefold since 2019, reflecting an impressive CAGR of 83.4% between FY13 and FY25. This growth has been primarily driven by Category II AIFs, which have contributed nearly 80% of the total in the past five years.

While domestic investors continue to dominate AIF fundraising, Category II AIFs demonstrate a balanced mix, with significant participation from Foreign Portfolio Investors (FPIs).

Anu Puri, Chairman of Anarock Group, also highlighted the impact of the government-backed SWAMIH Fund, which has infused over Rs 35,000 crore to revive stalled real estate projects. However, the Rs 15,000 crore corpus under SWAMIH II is insufficient to address the nearly 2,000 stalled projects across the country, he cautioned.

Regulatory challenges, including delays in insolvency resolution, resistance from existing lenders, and lapsed RERA or environmental clearances, continue to impede progress. “If these hurdles are addressed, AIFs particularly government-led ones like SWAMIH can effectively deliver on their promise to safeguard homebuyers’ interests”, Puri added.