Mumbai, June 25: India’s institutional real estate market demonstrated remarkable resilience in the first half of 2026 (January-June 2026), with total capital flows estimated to reach USD 4.3 billion across a record 54 transactions. This represents a 23% increase over H1 2025, according to JLL.
After a subdued H1 2025, the market demonstrated exceptional resilience with a powerful H2 2025 rebound that delivered a record-breaking USD 10.5 billion in institutional investments for CY 2025. While global market dynamics in early 2026 prompted investors to adopt more strategic, risk-calibrated approaches, India’s real estate sector proved its enduring appeal with a record-breaking 54 transactions in H1 2026, the highest half-year deal count ever recorded. This historic transaction volume underscores the market’s fundamental strength and sustained institutional confidence in Indian real estate. Evolving global market conditions prompted investors to refine their strategies, leading to innovative approaches that reflect the increasing sophistication and adaptability of India’s institutional real estate market.
Average deal sizes contracted by 40%, declining from USD 133 million in H1 2025 to USD 80 million in H1 2026. This compression reflects a strategic shift where investors deliberately fragmented their capital stack across more smaller transactions rather than concentrating exposure in fewer large-scale commitments, effectively distributing risk while maintaining market presence.
Navigating volatility: 54 deals signal sustained institutional commitment in H1 2026
“India’s institutional real estate market has demonstrated exceptional resilience in H1 2026, with investment volumes surging 23% year-on-year. The most significant development is the unprecedented surge in domestic institutional participation, which now commands 64% of total capital flows, the highest level ever recorded. This growth, driven by domestic PE players and REITs, signals the early stages of maturation of India’s domestic investment landscape and substantially reduced vulnerability to external shocks. As geopolitical conditions stabilize, we expect foreign investors to increase their capital deployment in India’s real estate market. The synergy between our strengthening domestic institutional base and renewed international participation will drive significantly higher institutional capital flows, establishing a more balanced and resilient investment ecosystem.” said Lata Pillai, Senior Managing Director & Head of Capital Markets, India, JLL.
Domestic investors drive market transformation with record 64% capital share
The most transformative development in H1 2026 is the unprecedented surge in domestic institutional participation, which reached 64% of total institutional capital flow, the highest level ever recorded in India’s real estate investment history. This represents a dramatic reversal from the foreign capital-dominated landscape that characterized India’s institutional real estate market through much of the previous decade.
Domestic institutional capital contributed USD 2.8 billion in H1 2026, representing a remarkable 165% year-on-year increase that decisively compensated for the sharp 37% contraction in foreign institutional investment. This substantial decline in international capital suggests a cautious recalibration by foreign investors, potentially driven by factors including global economic uncertainty, currency fluctuation concerns, risk repatriation requirements and rising inflation across major economies that house international institutional capital sources. The ability of India’s institutional real estate market to witness an increase in H1 2026 investment volumes compared to H1 2025 levels, despite foreign capital declining, underscores a fundamental structural shift. This clearly demonstrates the remarkable depth of domestic institutional capital. The reduced dependency on foreign capital signals greater market stability and substantially reduced vulnerability to external shocks originating in global financial markets. This transformation reflects the maturation of Indian institutional investors including REITs, insurance companies, pension funds, family offices and sophisticated domestic private equity platforms with substantial real estate allocation capacity.
Increasing share of domestic domiciled investors – average of 47% since 2023
In H1 2026, equity investments accounted for 83% of total domestic capital deployment, a marked departure from the pre-2025 period when debt and equity contributions were roughly equal. This equity-led approach signals strong conviction regarding India’s real estate fundamentals and long-term value creation potential. Domestic capital is taking a much stronger position in the commercial assets’ market, indicating a shift from pure residential play and debt-driven strategy. The equity dominance has been predominantly driven by domestic private equity funds and REITs, which collectively represented 72% of domestic institutional capital in H1 2026. The growing prominence of REITs has catalysed a pronounced shift toward core asset acquisitions, a trend that accelerated through 2025 and continued robustly into H1 2026.
Office reclaims dominant with 54% market share
The office sector reclaimed its traditional leadership position with commanding authority, capturing 54% of total institutional capital compared to the residential sector’s marginal leadership in H1 2025. Office sector investments reached USD 2.3 billion across 17 transactions, marking a dramatic 34% year-on-year increase that signals renewed institutional confidence in office real estate fundamentals. A defining characteristic of H1 2026 office investment activity is the overwhelming dominance of domestic capital, which accounted for 89% of total office investment volume. This represents a fundamental shift in India’s office investment landscape, where foreign institutional capital historically played a more prominent role. The domestic investor dominance reflects the maturation and scale of Indian institutional platforms with deep market knowledge and conviction in long-term office sector prospects.
Office Sector captures dominant share in institutional portfolios
The sector’s robust performance is anchored by powerful structural demand drivers including India’s expanding Global Capability Center (GCC) ecosystem, with multinational corporations establishing significant operations that create sustained demand for high-specification office space. Combined with stabilization of return-to-office trends, attractive entry pricing and consistent rental yields of 7.8-8%,these factors create a compelling investment thesis for sustained office sector performance.
Outlook: Foreign Capital Re-engagement Expected in H2 2026
India’s real estate sector enters the second half of 2026 from a position of demonstrated resilience, having maintained institutional capital flows at USD 4.3 billion despite unprecedented global volatility. The foundation established in H1 2026, characterized by record deal counts, domestic capital dominance and strategic risk recalibration, positions the market favourably for accelerated growth as external conditions normalize. With geopolitical uncertainties showing signs of abatement and inflationary concerns expected to moderate albeit in a gradual manner, the anticipated stabilization over the next quarter could prompt foreign institutional investors to resume active deployment. Historically, first-half activity represents ~ 50-52% of full-year institutional capital flows on an average. Applying this historical pattern to the estimated H1 2026 figure, total institutional flows could potentially approach USD 8.5 – 9 billion by year-end, if the market conditions support typical second-half momentum. The ability to maintain investment momentum through multiple crisis cycles underscores the fundamental strength of the underlying market dynamics and positions the sector for accelerated growth as geopolitical conditions stabilize and macroeconomic clarity improves.