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Private equity investments in Indian real estate fell to $1.13 billion in the first half of 2026, a 23 percent decline from $1.47 billion in the same period a year earlier, the Knight Frank India survey showed. The moderation extended a trend that began after the post-pandemic recovery phase even as occupier fundamentals stayed resilient across key asset classes. Office assets drew the bulk of the capital while residential flows contracted sharply and other segments saw no fresh transactions.
The Knight Frank India report placed office sector inflows at $998 million for the period, marking a 33 percent increase from the prior year and accounting for nearly 89 percent of total PE investment. Three-quarters of that office allocation went into ready assets that offered immediate cash flow visibility while residential PE inflows dropped 57 percent to $128 million. Warehousing and retail recorded no new private equity deals in the first half as investors maintained a wait-and-see stance despite underlying structural drivers in those segments.
NCR emerged as the leading destination with $411 million in PE inflows according to the Knight Frank India data, benefiting from strong occupier demand, infrastructure improvements and a stock of institutional-grade assets. The report noted that investors concentrated activity in established markets such as Mumbai, Pune and Hyderabad where execution certainty and predictable returns carried greater weight. Residential allocations within those cities remained selective with NCR capturing 47 percent of that segment’s flows.
Shishir Baijal, chairman and managing director of Knight Frank India, said in the report that the moderation reflected changes in global capital markets rather than any weakening of the underlying real estate story in India. He noted that factors including taxation, currency movements, financing costs and relative yield spreads had gained prominence as capital became more selective and focused on realised returns. The Knight Frank India assessment found that India’s ability to attract long-term institutional capital now depends on its performance relative to alternative investment destinations.
Separate industry reports presented a broader picture of institutional activity that included domestic capital and other instruments. Colliers International stated that total institutional investments in Indian real estate reached $4.5 billion in the first half of 2026, a 50 percent rise from the previous year, with domestic investors contributing $2.6 billion or 57 percent of the total. JLL data similarly placed institutional inflows at $4.3 billion for the period, up 23 percent, and highlighted domestic capital’s record 64 percent share.
The Knight Frank India report emphasised that India’s long-term real estate fundamentals remain firmly intact, citing continued urbanisation, economic growth, sector institutionalisation and an expanding pool of investment-grade assets. It recommended policy measures such as extending tax relief similar to Section 10(23FE) and the 2026 G-Sec exemption to REITs in order to reduce uncertainty for long-term capital. Baijal added that targeted relief can deepen institutional participation when it removes friction for such flows.
Office leasing stayed elevated through the first half of 2026 with global capability centres remaining a key driver, the Knight Frank India survey reported, supporting the sector’s appeal even within a selective investment environment. The absence of large platform deals in warehousing and retail reflected a temporary pause rather than a reassessment of their long-term attractiveness. Overall transaction volumes across asset classes continued to reflect healthy underlying demand despite the contraction in private equity allocations.
