India real estate PE investments fall 31% to $1.66 billion in 9M 2026; domestic investors dominate

Private equity (PE) investment in Indian real estate declined 31% year-on-year to $1.66 billion in the first nine months of 2026, even as the number of transactions increased 29% to 31, according to a report by Knight Frank India. Investments stood at $2.41 billion across 24 deals in the corresponding period last year.

The decline reflects a shift in investor composition and the absence of large-ticket transactions that had supported investment volumes in previous periods. The average disclosed deal size fell 47% to $53 million. Domestic investors accounted for 85% of total investments during January-September, compared with 25% a year earlier, signalling a sharp reversal in the dominance of foreign capital.

The report’s Q3 2026 Capital Market analysis found that investments in the July-September quarter fell 43% year-on-year to $530 million, despite a 25% increase in deal count to 15.

Office assets attract bulk of PE capital

The office segment attracted $1.18 billion in the first nine months, accounting for 71% of total real estate PE investment, although inflows declined 19% year-on-year. Completed office assets accounted for 78% of office investments, compared with 49% in the year-ago period, while 88% of the capital deployed in the segment came through equity.

Knight Frank said investors were increasingly favouring completed properties that offer established income streams and lower development risk amid higher return requirements.

Residential investment declined 33% to $320 million, accounting for 20% of total inflows. Debt and structured credit made up 97% of residential investments, while 83% of the segment’s capital went into under-construction projects. The National Capital Region (NCR) received 63% of residential investment.

Domestic investors reshape capital flows

Domestic investors contributed $1.42 billion during the nine-month period, compared with $603 million a year earlier. They accounted for 94% of residential investment and 81% of office investment, besides funding the only warehousing transaction during the period. Foreign investors contributed $240 million, of which 92% was equity.

“The changing composition of real estate investment is as important as the headline numbers,” said Shishir Baijal, chairman and managing director of Knight Frank India, highlighting the growing role of domestic capital and investors’ greater focus on risk and returns.

Warehousing gains, retail sees no investment

Warehousing investment rose 66% year-on-year to $160 million, entirely through a single transaction involving a completed asset in Q3. Retail attracted no PE investment during January-September, compared with $374 million a year earlier.

Geographically, NCR led with $568 million, or 34% of total investments, followed by Pune at $356 million and Chennai at $319 million. Mumbai received $276 million, while Bengaluru attracted $137 million.

Knight Frank said investment activity would remain sensitive to asset quality, risk allocation and currency-adjusted returns, with elevated global return expectations likely to keep foreign investors selective.