Domestic Capital Leads Real Estate Investment Surge in India
Domestic institutional capital has continued to strengthen its position in India’s real estate sector, surpassing foreign inflows for the third consecutive quarter and signaling a sustained shift in capital deployment dynamics.
Over the past three quarters, domestic investors have consistently accounted for the majority of institutional investment activity. Their share has risen from 63% (USD 1.1 billion) in Q3 2025 to 81% (USD 2.7 billion) in Q4 2025, and remained elevated at 76% (USD 1.2 billion) in Q1 2026.
According to Cushman & Wakefield, total institutional investment activity stood at USD 1.6 billion during the quarter, marking a 26% year-on-year increase and a 52% decline quarter-on-quarter. Domestic investors led activity with USD 1.2 billion, accounting for 76% of total inflows, while foreign investments totaled USD 0.4 billion, contributing the remaining 24%.
Domestic investors have now accounted for a larger share of institutional investments in four of the last five quarters, underscoring a sustained rebalancing of capital flows. At a time when foreign capital remains sensitive to global macroeconomic and geopolitical developments, the increasing depth and consistency of domestic capital is helping provide stability and continuity to investment activity.
Within this broader investment environment, overall institutional investment activity in the Indian real estate sector during Q1 2026 reflects both the scale and composition of capital flows, marking the highest first-quarter deployment recorded since 2021.
Private Equity (PE) remained the primary channel for institutional investment during the quarter, accounting for 74% of total inflows, while Real Estate Investment Trusts (REITs) contributed the remaining 26% of institutional capital during the quarter.
The office segment attracted the highest share of institutional investments with USD 1.0 billion in inflows, representing 64% of the total. This was followed by the hospitality sector, which attracted 13%, while the residential sector accounted for 9% of total investments during the quarter, underscoring the continued prominence of commercial real estate within institutional portfolios.
At a city level, Delhi NCR garnered 28% of the quarterly investment in Q1-26, followed by Chennai and Bengaluru with 17% and 14% shares, respectively, reflecting a broad-based institutional interest across major metro cities.
“Domestic capital has been particularly active in the office segment, and this momentum is likely to build further, supported by the strong performance of the asset class in terms of leasing, occupancy, and income visibility. At the same time, the consistent performance of REITs has reinforced investor confidence in income-generating real estate, while relatively muted returns in equity markets have prompted a rebalancing of capital towards more stable, yield-driven assets,” said Somy Thomas, Executive Managing Director - Capital Markets, Cushman & Wakefield.
