While investment activity moderated by 7% year-on year (YoY), the overall market continued to witness consistent deployment, supported by strong participation from domestic investors and sustained preference for consistent income-generating assets.
“Capital allocation is becoming increasingly differentiated across asset classes. While office continues to attract a broad spectrum of investors owing to its maturity, liquidity and stable income profile, we are also seeing growing interest in the data centre segment as investors seek to capitalise on India’s expanding digital infrastructure ecosystem. This diversification of capital is contributing to a deeper and more resilient investment landscape,” said Somy Thomas, Executive Managing Director, Capital Markets, Cushman & Wakefield.
For the first half of 2026, institutional investments totalled USD 3.5 billion, marking a 6% increase over H1 2025, reflecting continued confidence in India’s long-term real estate fundamentals despite global macroeconomic uncertainties.
The office sector continued to dominate institutional investment activity in Q2 2026, attracting nearly USD 1 billion and accounting for 51% of total investments. This marked the fourth consecutive quarter of office assets leading India’s real estate investment landscape. The sustained investor preference underscores continued confidence in the office sector’s long-term fundamentals and its ability to generate stable income.
“The continued dominance of office assets class in institutional investment for the fourth consecutive quarter reaffirms the sectors resilience, driven by strong occupier demand, particularly from GCCs, improving rental outlook and the availability of quality assets. Equally significant is the rapid emergence of data centres as a preferred investment class, reflecting India’s accelerating digital transformation and longterm infrastructure story,” said Pratyush Pandey, Founder AARE Consulting (All About Real Estate).
Investor interest in office real estate continues to be underpinned by strong occupier demand, particularly from Global Capability Centres (GCCs), tightening vacancy levels across major office markets, and continued rental growth in premium micro-markets. Limited availability of investment-grade assets has further reinforced the sector’s attractiveness among institutional investors.Data centres emerged as the second-largest recipient of institutional capital in Q2 2026, accounting for 40% of total investments. The sector’s growing share reflects increasing investor interest in digital infrastructure assets, supported by rising demand driven by rapid AI adoption, cloud expansion and data localisationrequirements.
Domestic institutions maintained their dominant position in investment activity, accounting for 54% of total investments in Q2 2026, compared with 46% by foreign investors. The domestic share has exceeded foreign capital for four consecutive quartersreflecting the growing depth of domestic capital.
The increasing domestic participation has helped counterbalance volatility in foreign capital flows arising from currency fluctuations and geopolitical developments.
For H1 2026, investments by domestic institutions stood at USD 2.2 billion, accounting for 64% of total investment activity, compared to a 43% share during H1 2025. Foreign investments totalled USD 1.3 billion, representing the remaining 36%, down from 57% in the corresponding period last year.
Investment activity during Q2 2026 was led by multi-city portfolios, which accounted for 55% of total capital deployment, reflecting investors’ preference for diversified exposure across markets. Among individual cities, Bengaluru led investment activity with a 23% share, followed by Chennai at 17%.
Private equity investors remained the primary source of institutional capital during Q2 2026, accounting for 85% of total investment volumes, while REIT-led investments contributed 15%.
Looking ahead to H2 2026, institutional investment activity is expected to remain stable, supported by India’s strong macroeconomic fundamentals and continued infrastructure-led growth. Domestic capital is expected to remain the primary driver of investment activity, while foreign investor participation is likely to improve gradually as global macroeconomic conditions stabilise.