Despite global trade and capital deployment uncertainties arising from the West Asia crisis, India’s real estate sector maintained strong investment momentum. Institutional inflows rose 70% year-on-year to $2.9 billion in Q2 2026 and 50% to $4.5 billion in H1 2026.
Among Tier I cities, Chennai and Bengaluru together attracted around $1.2 billion in institutional investment, accounting for nearly 27% of the total during the first half of the year. The office segment accounted for 85-95% of inflows in both cities. Multi-city deals accounted for 46% of overall investments, while Tier II and III cities such as Coorg, Hosur, Coimbatore, Kochi, and Ujjain also saw significant capital deployment, particularly in the hospitality, industrial, warehousing, and residential sectors.
“This strong performance was underpinned by growing confidence of domestic investors, opportunistic deployment of foreign capital and surge in investments within alternative & mixed-use assets. Moreover, institutional investors continue to be invested in India for the long-term, with the IMF recently raising its GDP forecast for Fiscal Year (FY) 2027 by 10 bps to 6.5%,” the report said.
Domestic investors drove real estate investments
According to the report, domestic investors drove real estate investments in India during H1 2026, with capital deployment rising 80% YoY to USD 2.6 billion and accounting for about 57% of the total inflows in the first half of the year. Strong conviction in the long-term prospects of Indian real estate continued to drive domestic investor interest.
The report said foreign investments saw a resurgence, especially in the second quarter, driven by select large deals, taking up foreign capital inflows to USD 1.9 billion during H1 2026. This 24% YoY growth was largely supported by strategic equity level investments, stake acquisitions and capital allocation across mixed-use and alternative assets.
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“Institutional investments in India’s real estate sector stood at USD 2.9 billion in Q2 2026, witnessing a 70% YoY rise. This growth was led by equally strong participation from domestic as well as foreign investors. Over the past few quarters, domestic investors have expanded their portfolios across asset classes, driving 40-60% of the real estate investments on a consistent basis. Foreign investors, meanwhile, although increasingly selective are likely to further tap into alternative and mixed-used segments. This balanced interplay of foreign and domestic investors will be crucial in charting the next growth phase of Indian real estate, especially during the times of uncertainty in capital deployment” said Badal Yagnik, CEO and Managing Director, Colliers India.
Office assets drive over 40% of investments in H1 2026 followed by mixed-use & alternative segments
During H1 2026, office segment continued to dominate capital deployment, attracting around USD 1.9 billion of investments and accounting for over 40% of the total capital inflows. Domestic investors drove inflows in the office segment, majority of which were in standing assets. In case of the residential segment, investments in H1 2026 dropped by 43% annually to USD 0.5 billion. Overall, residential investors treaded cautiously as cost pressures and moderation in housing sales are beginning to impact project viability, investment decisions and timelines, the report said.
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“During the second quarter, office assets drove about 37% of the overall capital inflows at USD 1.1 billion followed by mixed-use and alternative segments. Notably, quarterly inflows across all the three segments saw close to or over 4X rise annually. Within the office segment, investors largely preferred operational assets,” said Vimal Nadar, National Director and Head of Research, Colliers India.
“The recent listing of another office REIT further reinforces the growth momentum in India’s office market, with leading developers actively monetizing operational assets within their portfolios. Moreover, with office leasing anticipated to grow further in the second half of the year, institutional investors are likely to remain upbeat about the segment throughout 2026,” Nadar said.
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Interestingly, inflows in mixed-use assets and alternatives surged significantly, especially in the second quarter of the year. At around USD 0.8 billion worth of investments each, these segments individually contributed close to one-fifth of the total inflows during H1 2026. Foreign investors drove majority of the activity in these segments largely through equity stake purchases, signalling their long-term intent in portfolio diversification beyond the core real estate segments, according to the report.