Institutional investments in India’s real estate sector climbed 50% year-on-year to $4.5 billion during the first half of 2026, marking the strongest first-half capital inflows in six years, according to a report by Colliers India. The robust growth reflects rising investor confidence in the Indian real estate market, despite ongoing global economic uncertainties and geopolitical tensions.
Investment activity remained resilient throughout the first six months of the year. Quarterly investments increased 70% year-on-year to $2.9 billion during the April-June quarter, demonstrating sustained confidence among both domestic and international investors. According to the report, strong participation from domestic investors, a revival in foreign capital through strategic transactions, and growing investments in mixed-use and alternative assets collectively drove this impressive performance.
Moreover, institutional investors continued to view India as an attractive long-term investment destination. The report also highlighted that the International Monetary Fund’s (IMF) upward revision of India’s FY27 GDP growth forecast to 6.5% further strengthened investor sentiment toward the country’s real estate sector.
Domestic investors emerged as the largest contributors during the first half of 2026 by investing $2.6 billion, representing an 80% increase compared with the previous year. Consequently, they accounted for nearly 57% of total institutional investments, reflecting growing confidence in the long-term fundamentals of the Indian property market.
Meanwhile, foreign investment also recovered strongly, particularly during the second quarter. Overseas investors deployed $1.9 billion during H1 2026, recording a 24% year-on-year increase. Strategic equity investments, stake acquisitions, and investments across mixed-use and alternative assets primarily drove this growth.
Badal Yagnik, CEO and Managing Director, Colliers India, said, “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.”
He further explained that domestic investors have consistently contributed between 40% and 60% of total real estate investments in recent quarters by expanding their portfolios across multiple asset classes. At the same time, foreign investors have become increasingly selective and now focus more on mixed-use developments and alternative assets. According to Yagnik, balanced participation from both investor groups will remain essential for sustaining the sector’s long-term growth.
The office segment continued to dominate institutional investment activity by attracting over 40% of total capital inflows during H1 2026. Investors deployed approximately $1.9 billion into office properties, with domestic investors largely targeting operational commercial assets that generate stable returns.
However, the residential real estate segment experienced a slowdown. Investments declined 43% year-on-year to $500 million as investors adopted a cautious approach amid rising construction costs, moderating housing sales, and concerns regarding project viability.
In contrast, mixed-use developments and alternative real estate assets emerged as the fastest-growing investment categories. Each segment attracted nearly $800 million, contributing roughly 20% of total institutional investments individually. Foreign investors led these categories through equity stake acquisitions, highlighting their strategy of diversifying beyond traditional commercial and residential assets.
Additionally, the hospitality sector delivered strong growth by attracting $300 million in institutional investments during H1 2026. Although the sector started from a relatively lower base, investments more than tripled compared with the same period last year.
Vimal Nadar, National Director and Head of Research, Colliers India, said, “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.”
He also noted that investors continued to favour operational office assets. Furthermore, the recent listing of another office REIT strengthened confidence in India’s commercial office market. With office leasing activity expected to improve during the second half of 2026, Nadar believes institutional investment momentum will likely remain strong throughout the year.
Among India’s Tier-I cities, Chennai and Bengaluru emerged as the leading investment destinations. Together, the two cities attracted nearly $1.2 billion, accounting for approximately 27% of total institutional investments during H1 2026. Each city received close to $600 million, with office assets contributing between 85% and 95% of total investments.
Furthermore, the report highlighted the increasing significance of multi-city transactions, which represented 46% of total institutional investment inflows during the first half of the year. At the same time, Tier-II and Tier-III cities, including Coorg, Hosur, Coimbatore, Kochi, and Ujjain, witnessed growing investor interest across hospitality, industrial and warehousing, and residential developments.
India’s real estate sector continues to attract substantial institutional capital as investors capitalize on the country’s strong economic fundamentals, expanding commercial property market, and growing demand for diversified real estate assets. The combination of resilient domestic participation, recovering foreign investments, and rising opportunities across office, hospitality, and alternative asset classes positions the sector for sustained growth through the remainder of 2026.
