Money Keeps Flowing Into Indian Realty Despite Global Turbulence

India's institutional real estate market has defied a turbulent global backdrop to post its strongest first-half performance in years. Despite geopolitical uncertainty, persistent inflationary pressures, and currency volatility across emerging markets, institutional investment in Indian real estate reached $4.33 billion in the January-June 2026 period - a 23% increase year-on-year, according to JLL India data. The period also recorded a landmark 54 transactions, the highest deal count in the country's real estate investment history.

The standout story of H1 2026 is the decisive shift in who is writing the cheques. Domestic institutional capital now accounts for 64% of total investment volume - the highest share on record - with domestic investors deploying $2.8 billion during the period. This was driven primarily by domestic private equity funds and REITs, which together represented 72% of all domestic capital deployed. Equity investments accounted for 83% of total domestic deployment, reflecting a shift away from the more balanced debt-equity mix that characterised the market before 2025.

The surge in domestic capital comes at a time when foreign investors have adopted a more cautious posture. Foreign institutional investment fell 37% year-on-year, as overseas capital remained wary of global macroeconomic uncertainty, currency fluctuations and inflationary headwinds. Foreign capital's share of total investment dropped to just 36% in H1 2026 - compared to 98% as recently as 2020, underscoring a dramatic structural rebalancing in the source of funds flowing into Indian commercial real estate.

"As geopolitical conditions stabilise, we expect foreign investors to increase their capital deployment in India's real estate market. The combination of a stronger domestic institutional base and renewed foreign participation will drive higher capital flows and create a more balanced and resilient investment ecosystem."

- Lata Pillai, Senior MD & Head of Capital Markets, India, JLL

Office Sector Leads; Bengaluru and Chennai Drive South India Gains

The office sector emerged as the largest recipient of institutional capital in H1 2026, reclaiming its traditional leadership position after residential assets dominated investment activity in the prior period. Office real estate investments rose 34% year-on-year to $2.3 billion across 17 transactions, accounting for 54% of total institutional investment volume. Domestic investors dominated office acquisitions, contributing 89% of total office investment by volume.

Experts attribute the office sector's outperformance to several structural tailwinds: continued expansion of India's Global Capability Centre ecosystem, improving return-to-office trends, attractive entry pricing compared to global peers, and rental yields in the 7.8-8% range - compelling for institutional capital seeking stable income in an uncertain rate environment.

Geographically, Bengaluru and Chennai together drew 34% of all institutional capital flows, buoyed by large acquisitions in commercial and technology-led real estate corridors. Non-core assets - including data centres, logistics, and alternative real estate - made up 57% of total investment volume during the six-month period, reflecting the maturing and diversifying nature of institutional appetite in the Indian property market.

Average deal size contracted sharply, falling 40% to $80 million in H1 2026 from $133 million a year earlier. Rather than concentrating exposure in large single transactions, investors are deliberately spreading capital across a higher number of deals - a strategy JLL analysts describe as risk-calibrated deployment consistent with the global macro environment.

"Strong occupier demand, improving asset performance and healthy fundamentals across key real estate segments continue to support investment activity. The depth and diversity of India's property market provide confidence to investors pursuing long-term value creation despite near-term global uncertainties."

- Saurabh Rathi, Co-Head, Real Estate Funds, Motilal Oswal Alternates

Looking ahead, industry experts expect foreign investors to gradually increase capital deployment as geopolitical uncertainties ease and inflationary pressures moderate. The structural case for Indian real estate investment - anchored by GCC expansion, urbanisation, REIT growth, and improving institutional infrastructure - remains intact heading into H2 2026.