Institutional real estate investments jump 50% to $4.5 billion in H1 2026, hit six-year high

Institutional investments in India's real estate sector rose 50% year-on-year to $4.5 billion in the first half of 2026, marking the highest first-half capital inflows in six years, according to a report by Colliers India. 

Investment activity remained resilient despite global trade and capital deployment uncertainties triggered by the West Asia crisis. Quarterly investments climbed 70% year-on-year to $2.9 billion in the April-June quarter, reflecting sustained confidence among both domestic and foreign investors. 

The report attributed the strong performance to growing participation by domestic investors, a resurgence in foreign capital through large strategic deals, and rising investments in mixed-use and alternative assets. It also noted that institutional investors continue to view India as a long-term investment destination, supported by the International Monetary Fund's upward revision of India's FY27 GDP growth forecast to 6.5%. 

Domestic investors emerged as the biggest contributors during the first half of the year, deploying $2.6 billion, up 80% from a year earlier. They accounted for about 57% of total institutional investments, driven by confidence in the long-term prospects of the Indian real estate market. 

Foreign investments also rebounded, particularly in the second quarter, with capital inflows rising 24% year-on-year to $1.9 billion during H1 2026. The increase was led by strategic equity investments, stake acquisitions and investments in mixed-use and alternative assets. 

"Institutional investments in India's real estate sector stood at $2.9 billion in Q2 2026, witnessing a 70% year-on-year rise. This growth was led by equally strong participation from domestic as well as foreign investors," said Badal Yagnik, CEO and Managing Director, Colliers India. 

He said domestic investors have consistently accounted for 40-60% of real estate investments in recent quarters by expanding their portfolios across asset classes, while foreign investors have become more selective and are increasingly targeting alternative and mixed-use assets. The balanced participation of both investor groups, he added, will be crucial for sustaining the sector's next phase of growth. 

Office assets remain the top investment destination 

The office segment continued to attract the largest share of institutional capital, accounting for more than 40% of total investments during H1 2026. 

Office assets drew $1.9 billion in investments, largely driven by domestic investors focusing on operational properties. 

In contrast, investments in the residential segment declined 43% year-on-year to $0.5 billion, reflecting cautious investor sentiment amid rising costs, moderating housing sales and concerns over project viability. 

Mixed-use and alternative assets emerged as the fastest-growing investment categories, attracting nearly $0.8 billion each during the first half and contributing around one-fifth of total inflows individually. Foreign investors dominated these segments through equity stake acquisitions, signalling a strategy of diversifying beyond traditional real estate assets. 

The hospitality sector also witnessed strong momentum, attracting $0.3 billion in investments during H1 2026, more than three times the level recorded a year earlier, albeit on a lower base. 

"During the second quarter, office assets accounted for about 37% of total capital inflows at $1.1 billion, followed by mixed-use and alternative segments. Quarterly investments across all three segments increased by close to or more than four times compared with a year ago," said Vimal Nadar, National Director and Head of Research, Colliers India. 

He added that investors continued to favour operational office assets and said the recent listing of another office REIT reinforced confidence in India's office market. With office leasing expected to strengthen in the second half of the year, institutional investment activity is likely to remain robust through 2026. 

Chennai, Bengaluru lead city-wise investments 

Among Tier-I cities, Chennai and Bengaluru together attracted around $1.2 billion in institutional investments during H1 2026, accounting for approximately 27% of total inflows. 

Each city received nearly $0.6 billion, with office assets contributing 85-95% of investments. 

The report also highlighted the growing importance of multi-city transactions, which accounted for 46% of total investment inflows during the first half. Meanwhile, Tier-II and Tier-III cities such as Coorg, Hosur, Coimbatore, Kochi and Ujjain witnessed increased capital deployment, particularly across hospitality, industrial and warehousing, and residential projects.