Domestic institutional capital has continued to strengthen its position in India’s real estate sector, surpassing foreign inflows for the third consecutive quarter and signalling a sustained shift in capital deployment dynamics. Over the past three quarters, domestic investors have consistently accounted for the majority of institutional investment activity, with their share rising from ~63% (USD 1.1 billion) in Q3 2025 to ~81% (USD 2.7 billion) in Q4 2025, and remaining elevated at ~76% (USD 1.2 billion) in Q1 2026. This trend reflects growing local conviction in real estate as an asset class and a more prominent role for domestic capital in anchoring investment activity.
According to Cushman & Wakefield’s Q1 2026 Capital MarketBeat report, 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 totalled 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.
Investor Share and Investment Amount (USD Billion): Q1 2025 - Q1 2026
|
Q1 2025 |
Q2 2025 |
Q3 2025 |
Q4 2025 |
Q1 2026 |
||||||
|
Row Labels |
Amount |
share |
Amount |
share |
Amount |
share |
Amount |
share |
Amount |
share |
|
Domestic |
0.75 |
59.19% |
0.66 |
32.99% |
1.09 |
62.88% |
2.71 |
80.91% |
1.21 |
75.52% |
|
Foreign |
0.52 |
40.81% |
1.34 |
67.01% |
0.61 |
34.81% |
0.61 |
18.13% |
0.39 |
24.48% |
|
Mixed |
- |
0.00% |
- |
0.00% |
0.04 |
2.31% |
0.03 |
0.95% |
- |
0.00% |
|
Grand Total |
1.27 |
100.00% |
2.00 |
100.00% |
1.74 |
100.00% |
3.35 |
100.00% |
1.6 |
100.00% |
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.
Somy Thomas, Executive Managing Director - Capital Markets, Cushman & Wakefield, said
“The sustained dominance of domestic capital marks an important inflection point for India’s real estate investment landscape. What we are seeing is a more structural shift in capital allocation, driven by growing confidence in the underlying fundamentals of the market and a more disciplined, institutional approach to deployment. 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. As a result, real estate is increasingly being viewed as a core allocation within domestic portfolios, and this trend is expected to sustain in the near to medium term.”
