Mumbai: Real estate continued to dominate net investments in Alternate Investment Funds (AIFs) in India, with Rs 73,903 crore invested during the first nine months of FY25, according to an April report. AIFs are privately pooled funds that invest in non-traditional assets such as private equity, hedge funds, and real estate, offering niche, high-risk, high-reward opportunities typically suited for experienced investors.

Anarock Research reported that real estate accounted for the largest sectoral share—15%—of the total Rs 5,06,196 crore invested across all sectors during April–December FY25.

Other sectors benefiting from AIF investments include IT/ITeS, Financial Services, NBFCs, Banks, Pharma, FMCG, Retail, and Renewable Energy. “By the end of the first nine months of FY25, AIF investments in real estate grew 8% from Rs 68,540 crore at FY24-end to Rs 73,903 crore. This momentum is expected to sustain and even accelerate,” the report stated.

The number of registered AIFs has surged 36-fold over the past decade—from 42 in March 2013 to 1,524 as of March 5, 2025. Since 2019, total capital commitments have risen fivefold, with an 83.4% CAGR between FY13 and FY25.

“With constraints in traditional funding sources, AIFs serve as agile and innovative financing vehicles to address capital gaps in real estate development,” said Prashant Thakur, Regional Director and Head of Research at Anarock Group. He added that the growth of blended finance models, AI-driven risk assessment, and streamlined regulations would further enhance AIFs’ impact.

Category II AIFs have led the surge, contributing nearly 80% of all AIF activity in the past five years. Domestic investors continue to dominate fundraising, though Category II funds have seen nearly equal participation from foreign portfolio investors (FPIs).