India's institutional real estate sector demonstrated notable resilience in the first half of 2026, attracting nearly $4.3 billion across 54 transactions. This figure represents a 23% increase year-on-year, underscoring a robust recovery following a subdued performance in the previous year. According to a report by JLL, a leading commercial real estate services firm, domestic institutional capital played a pivotal role, accounting for 64% of total investment flows—the highest proportion on record. Domestic players contributed approximately $2.8 billion, effectively offsetting a significant 37% decline in foreign institutional investment during the same period.
Lata Pillai, Senior Managing Director and Head of Capital Markets at JLL in India, highlighted that the growth driven by domestic private equity (PE) players and Real Estate Investment Trusts (REITs) indicates the early maturation of India's domestic investment landscape. This trend fosters reduced vulnerability to external shocks, suggesting an evolving market characterized by greater stability. Pillai also noted that as geopolitical conditions improve, foreign investors are likely to increase their capital deployments in India's real estate sector. The interplay between a strengthening domestic institutional base and renewed international interest is expected to enhance institutional capital flows, contributing to a more balanced investment ecosystem.
Despite a contraction in average deal sizes—down 40% to approximately $80 million in H1 2026 as investors opted for smaller transactions to mitigate risk—the overall market displayed exceptional resilience. After a powerful rebound in the second half of 2025, which saw a record $10.5 billion in institutional investments for the calendar year, the current momentum reflects an evolving landscape. The dramatic increase in domestic institutional capital, up 165% year-on-year, signals a robust shift in investment dynamics, further evidenced by the significant role of domestic private equity funds and REITs, which represented 72% of total domestic institutional capital in H1 2026.
The decline in foreign capital inflows points to a cautious recalibration by international investors, likely influenced by global economic uncertainties, currency fluctuation risks, and inflationary pressures in major economies. This shift highlights a growing independence from foreign capital sources, contributing to the stability of the Indian real estate market. Moreover, the increasing prominence of REITs has facilitated a shift towards core asset acquisitions, a trend that has gained momentum through 2025 and continues robustly into 2026. Overall, the landscape of India's real estate market is evolving, characterized by a blend of strong domestic participation and the potential for renewed foreign investment as conditions stabilize.