Domestic capital led a 50% jump in institutional real estate investment during H1 2026, with office assets and non-metro markets both playing a bigger role than before.
India's real estate sector continued to demonstrate strong resilience in the first half of 2026, attracting robust institutional investment despite global uncertainties linked to the West Asia crisis, trade disruptions and cautious capital deployment trends across international markets. According to the latest market data, institutional inflows into Indian real estate rose sharply by 70% year-on-year to $2.9 billion in Q2 2026, while investments during H1 2026 climbed 50% to $4.5 billion, underlining sustained investor confidence in the country's long-term property market fundamentals.
The investment momentum was driven by a healthy balance of domestic and foreign capital, with domestic investors taking the lead in the first half of the year. Capital deployment by domestic investors increased 80% year-on-year to $2.6 billion, accounting for around 57% of the total institutional inflows in H1 2026. This strong participation reflects growing confidence among Indian investors in the long-term growth prospects of the country's real estate market, especially across office, mixed-use and alternative asset classes.
Foreign investments also made a strong comeback, particularly in the second quarter of the year. According to the report, foreign capital inflows rose to $1.9 billion during H1 2026, marking a 24% annual increase. This recovery was largely supported by large strategic transactions, stake acquisitions, equity-level investments and capital deployment in mixed-use developments and alternative assets. The data suggests that while foreign investors remain selective, they continue to view India as a strategic long-term market, particularly in segments offering diversification beyond traditional real estate assets.
Among the major urban markets, Chennai and Bengaluru emerged as key investment destinations during the first half of the year. Together, the two cities attracted around $1.2 billion in institutional investments, accounting for nearly 27% of the total inflows during H1 2026. The office segment dominated capital deployment in both cities, contributing 85% to 95% of total inflows. At the same time, multi-city deals accounted for 46% of total investments, reflecting a broader portfolio-based investment strategy by institutional players.
The report also highlighted the growing importance of non-metro markets in India's investment landscape. Tier II and III cities such as Coorg, Hosur, Coimbatore, Kochi and Ujjain saw meaningful capital deployment, especially in the hospitality, industrial, warehousing and residential segments. This trend indicates a widening investor appetite beyond core metropolitan markets, as developers and funds explore opportunities linked to tourism, manufacturing, logistics and regional urban expansion.
The office segment remained the single largest contributor to institutional investments during H1 2026. It attracted around $1.9 billion, accounting for more than 40% of total capital inflows. Domestic investors played a major role in office investments, with a strong preference for operational or standing assets, which offer stable rental income and lower execution risk. The segment's continued appeal has been reinforced by strong leasing activity, improving occupier demand and the recent listing of another office REIT, which has further strengthened confidence in India's commercial real estate market.
According to Badal Yagnik, CEO and Managing Director of Colliers India, the strong performance of the sector reflects the growing confidence of both domestic and foreign investors, even at a time when global capital flows remain uncertain. He noted that domestic investors have consistently accounted for 40% to 60% of real estate investments over the past few quarters, while foreign investors are increasingly focusing on alternative and mixed-use assets. This balanced participation, he said, will be crucial in shaping the next phase of growth in Indian real estate.
At the same time, the residential segment showed signs of moderation. Investments in housing declined 43% year-on-year to $0.5 billion in H1 2026 as investors turned cautious amid rising construction costs, moderation in housing sales and growing concerns over project viability and returns. In contrast, mixed-use and alternative assets recorded a sharp rise in investor interest, each attracting around $0.8 billion during the first half of the year and contributing close to one-fifth of total inflows.
Overall, the H1 2026 investment trends show that India's real estate market remains a preferred destination for long-term capital, supported by economic growth, asset diversification opportunities and a strong pipeline of institutional-grade properties across major and emerging cities.
