Institutional real estate investments rise 16% QoQ to $1.9 billion in Q2; office, data centres lead inflows: Cushman & Wakefield

Institutional investments in India's real estate sector rose 16% quarter-on-quarter (QoQ) to $1.9 billion in the April-June quarter (Q2 2026), driven by sustained domestic investor participation and continued demand for income-generating assets, according to Cushman & Wakefield's Q2 2026 Capital Marketbeat report.

On a year-on-year (YoY) basis, however, investments declined 7%. Despite the moderation, the property market continued to see steady capital deployment, supported by strong domestic capital and investor preference for stable-yielding assets.

For the first half of 2026 (H1 2026), institutional investments stood at $3.5 billion, up 6% from the corresponding period last year, reflecting continued confidence in India's long-term real estate fundamentals despite global macroeconomic uncertainties.

The office segment remained the largest investment destination during Q2, attracting nearly $1 billion, or 51% of total institutional inflows. This marked the fourth consecutive quarter in which office assets topped the investment charts, underscoring sustained confidence in the sector's long-term growth prospects and stable income profile.

According to the report, demand for office assets continues to be supported by strong leasing activity from Global Capability Centres (GCCs), tightening vacancy levels across major markets, rental growth in premium micro-markets, and a limited supply of investment-grade assets.

Data centres emerged as the second-largest asset class, accounting for 40% of total investments during the quarter. The sector's growing appeal is being driven by rapid adoption of artificial intelligence (AI), cloud expansion, and increasing data localisation requirements, the report said.

Domestic investors dominate

Domestic institutions continued to anchor investment activity, contributing 54% of total investments in Q2, compared with 46% by foreign investors. This marks the fourth consecutive quarter in which domestic capital outpaced foreign inflows, highlighting the increasing depth of local institutional participation.

For H1 2026, domestic investors deployed $2.2 billion, accounting for 64% of total investments, compared with a 43% share in the same period last year. Foreign investments stood at $1.3 billion, representing 36% of total inflows, down from 57% a year ago.

The report said stronger domestic participation has helped cushion the market from volatility in foreign capital flows caused by currency movements and geopolitical uncertainties.

Multi-city deals gain traction

Investment activity in Q2 was led by multi-city portfolios, which accounted for 55% of total capital deployment, reflecting investors' preference for diversified exposure across multiple markets.

Among individual cities, Bengaluru attracted the highest share of investments at 23%, followed by Chennai at 17%.

Private equity investors remained the dominant source of institutional capital, accounting for 85% of total investment volumes during the quarter, while REIT-led investments contributed the remaining 15%.

Looking ahead, Cushman & Wakefield expects institutional investment activity to remain stable in the second half of 2026, supported by India's strong macroeconomic fundamentals and infrastructure-led growth. Domestic investors are expected to remain the primary drivers of capital deployment, while foreign participation is likely to improve gradually as global economic conditions stabilise.

"Capital allocation is becoming increasingly differentiated across asset classes. While office continues to attract a broad spectrum of investors owing to its maturity, liquidity and stable income profile, we are also seeing growing interest in the data centre segment as investors seek to capitalise on India's expanding digital infrastructure ecosystem," said Somy Thomas, Executive Managing Director, Capital Markets, Cushman & Wakefield.

He added that investors are increasingly pursuing portfolio and multi-city acquisitions to achieve greater scale and diversification, and that healthy domestic fundraising is expected to keep investment activity resilient through the second half of 2026.