Institutional investments in India's real estate sector surged 50 per cent year-on-year to $4.5 billion in the January–June 2026 period, marking the strongest first-half performance in six years, according to a report released on Friday, 3 July 2026 by real estate consultancy Colliers. The robust inflow came despite headwinds from the West Asia crisis, signalling sustained institutional confidence in Indian property markets.

Quarterly Momentum Accelerates

The momentum was particularly sharp in the April–June quarter, where investments surged 70 per cent YoY to $2.9 billion — suggesting the pace of capital deployment is accelerating rather than plateauing. This is the third consecutive quarter of double-digit YoY growth in institutional real estate inflows, according to the Colliers data.

Domestic Capital Takes the Lead

Domestic investors drove the market, contributing $2.6 billion — or 57 per cent of total inflows — during H1 2026. Foreign investments also grew, rising 24 per cent YoY to $1.9 billion, though the share of foreign capital has moderated as global funds turn more selective.

Badal Yagnik, Chief Executive Officer and Managing Director of Colliers India, noted: 'Domestic investors have consistently contributed up to 60 per cent of institutional investments over the past few quarters, while foreign investors are becoming increasingly selective and expanding their focus beyond traditional real estate assets.'

Office, Mixed-Use and Hospitality Lead Asset Classes

Office assets remained the single largest investment destination in H1 2026, with domestic investors driving most of the capital into operational office properties. Mixed-use and alternative assets each attracted around $0.8 billion, together contributing nearly two-fifths of total investments.

The hospitality segment recorded $0.3 billion in investments — more than three times the level seen a year earlier — pointing to a post-pandemic recovery in travel-linked real estate. Notably, the residential segment bucked the broader trend, with institutional investments declining 43 per cent YoY to $0.5 billion, as rising construction costs and moderating housing sales kept investors cautious.

Regional Breakdown: South India and Tier II Cities Emerge

Chennai and Bengaluru together attracted approximately $1.2 billion, accounting for about 27 per cent of total institutional investments during the first half. Multi-city transactions represented 46 per cent of total investments, reflecting a broadening of deal activity beyond single-market bets.

Tier II and Tier III cities also recorded notable capital deployment, particularly in hospitality, industrial, and residential projects — a signal that institutional appetite is moving beyond the six established metros.

What to Watch

With the West Asia situation still unresolved, the trajectory of foreign inflows in the second half of 2026 will be a key indicator of global risk appetite toward emerging market real estate. Industry observers expect office and industrial assets to remain the primary draw, while the residential segment's recovery will hinge on cost stabilisation and demand revival in the mid-income housing category.