Knight Frank India, a prominent international property consultancy, has released its latest report, "Trends in Private Equity Investment in India: H1 2026," revealing that private equity (PE) investments in Indian real estate reached USD 1.13 billion during the first half of 2026. This figure represents a 23% decrease year-on-year, down from USD 1.47 billion in the same timeframe last year. The report indicates that the office sector continues to dominate, with 89% of PE investments allocated to this asset class, while the residential sector received the remaining share. Notably, the National Capital Region (NCR) recorded the highest levels of investment among the top eight cities in India, reflecting its enduring appeal to investors.
The decline in investment activity can be attributed to a more selective approach to capital deployment, driven by elevated global interest rates, tighter financial conditions, and increased geopolitical uncertainty. However, the report emphasizes that this downturn should not be interpreted as a weakening of India's real estate fundamentals. Instead, it signals a shift in the global investment climate, where institutional investors are increasingly focused on risk-adjusted returns, liquidity, and execution certainty rather than growth potential alone.
In H1 2026, NCR emerged as the leading destination for private equity investments, showcasing a significant 522% year-on-year increase in inflows, totaling USD 411.1 million. This marks a substantial rise from USD 66 million recorded in H1 2025. The region accounted for over one-third of total PE investments during this period, driven by a balanced mix of office and residential transactions, infrastructure development, and a growing corporate occupier ecosystem. Following NCR, Pune attracted USD 355.9 million in investments, bolstered by selective residential transactions and its strategic position as an office and manufacturing hub. Chennai also showed promise, drawing USD 154.7 million, benefiting from robust fundamentals in industrial, logistics, and commercial real estate.
The office sector proved to be the strongest-performing asset class in H1 2026, constituting nearly 89% of all PE investments in Indian real estate. Investments in this segment surged by 33% to USD 998 million, compared to USD 579 million during H1 2025. A significant shift in investor preference towards ready office assets was noted, with completed properties making up approximately 75% of total office investments, a marked increase from 53% in the previous year. Conversely, private equity investments in the residential sector fell from USD 297 million in H1 2025 to USD 128 million in H1 2026, reflecting a more cautious stance by investors regarding development-led opportunities. Despite this moderation, the residential market remains supported by increasing formalization and steady demand from end-users across key markets. Knight Frank India reassures that the lack of major transactions in the warehousing and retail sectors does not indicate a decline in their attractiveness, as India's long-term real estate fundamentals remain robust amid ongoing urbanization and economic growth.