Real estate dominates AIF net investments with Rs 73,903 Cr till 9M FY25

Ziraat Times Team Report

• INR 5,06,196 crore AIF (Alternate Investment Funds) net investments made till 9M FY2025 across various sectors; real estate comprised highest share at 15%
• FY2019 – 9MFY 2025, AIF sector maintained a CAGR of approx. 26%
• AIFs’ overall commitment across Indian sectors rose from INR 2,82,148 Cr in FY 2019 to INR 13,05,179 Cr in 9M FY2025
• Surge in AIF activity largely driven by Category II AIFs with a mix of Real Estate Funds, Private Equity, Debt Funds, & Fund of Funds (FoF)
• In the last five fiscal years, Category II AIFs accounted for approx. 80% of total AIF commitments
• Since inception, SWAMIH Fund has injected INR 35,000+ crore in liquidity to revive stuck projects
• AIF-backed investments directly impact real estate-linked industries like cement, steel & construction labour

Mumbai: The rise of Alternate Investment Funds (AIFs) has significantly transformed real estate financing in India, offering a crucial lifeline to projects struggling with lack of funding and unlocking new opportunities for developers. AIFs – privately pooled funds that invest in non-traditional assets like private equity, hedge funds, and real estate – offer niche, high-risk, high-reward opportunities suited for experienced investors.

In its AIFs Research Report 2025, ANAROCK Research has compiled SEBI data which indicates that till 9M FY25, the real estate sector accounted for the largest share (15%) of cumulative net AIF investments, with INR 73,903 crore invested in real estate out of an all-sectors total of INR 5,06,196 crore. Other sectors benefiting from AIF investments include IT/ITeS, Financial Services, NBFCs, Banks, Pharma, FMCG, Retail, Renewable Energy, and others.

Source: SEBI & ANAROCK Research (cumulative net investment made across sectors till 9M FY25)

By the end of 9M FY25, AIF investments in real estate rose from INR 68,540 Cr by FY 2024-end to INR 73,903 Cr – an appreciable 8% growth in first three quarters of fiscal year 2025. This pace is expected to sustain and pick up.

Prashant Thakur, Regional Director & Head – Research, ANAROCK Group, says, “Amidst increasing constraints on traditional funding sources, AIFs are an agile and innovative financing mechanism to address capital gaps at various stages of real estate development. Since they pool capital from domestic and foreign investors, AIFs are a sustainable and scalable funding ecosystem. Going forward, the adoption of blended finance models, AI-driven risk assessments, and streamlined regulatory frameworks maximize the impact of AIFs further.”

Commitments Surge

The number of AIF active in the market has grown 36-fold over the past decade – from 42 by 31st March 2013 to a 1,524 AIFs as of 5th March 2025, with commitment raised increasing five-fold since 2019. Between FY2013 and FY2025, the commitment raised in AIFs has seen an impressive 83.4% compounded annual growth rate (CAGR). This is a strong testimony to their growing importance in the broader investment landscape.

Source: SEBI & ANAROCK Research 

This surge in commitments is mainly fuelled by Category II AIF, which is contributing almost 80% over the last five fiscal years. Domestic investors continue to hold the majority share in AIF fundraising activities; however, Category II AIFs exhibit a notable balance with foreign portfolio investors (FPIs) having an almost equal participation.

Investment into the real estate sector play a significant role in growth of category II AIFs. Regulatory reforms, a surge in startups, and a greater influx of seasoned investors are key growth drivers.

SWAMIH Sets the Pace

“The SWAMIH Fund, India’s flagship AIF and arguably the most prominent, has helped revive numerous stalled projects with liquidity infusions of over INR 35,000 crore to date,” says Anuj Puri, Chairman – ANAROCK Group. “By facilitating the completion of many thousands of housing units, SWAMIH Fund has been an unmitigated boon for homebuyers across the country and helped bring considerable stability to the real estate market. That said, the SWAMIH Fund fights a constant uphill battle against various impediments.”

SWAMIH – The Challenges:

• Though substantial, the INR 15,000 crore corpus through SWAMIH II is not enough to revive India’s close to 2,000 stalled projects
• Regulatory hurdles, including insolvency cases under NCLT, further complicate the projects revival process
• Existing lenders often resist ceding the first charge on stressed assets, delaying financing
• Approval bottlenecks, such as expired RERA registrations and environmental clearances, add to implementation delays
• Homebuyer litigations and withheld payments due to past delays create cash flow constraints, making execution more complex

“The SWAMIH Fund’s encumbered journey underscores that addressing India’s stalled housing crisis requires more than just capital — it demands systemic reform,” says Puri. “Overcoming entrenched bottlenecks like regulatory delays, lender resistance, and cash flow constraints is key to unlocking its full potential. If these challenges are tackled head-on, the Fund can truly bridge the gap between promise and execution on its mission to rescue homebuyers who have no other recourse.”