India's institutional real estate market witnessed a strong recovery in the first half of 2026, with investments rising 23% year-on-year to an estimated USD 4.3 billion across a record 54 transactions, according to a report by JLL.
The rebound comes after a subdued first half in 2025 and follows a record-breaking second half that helped institutional investments touch USD 10.5 billion for the full calendar year 2025.
While global uncertainties prompted investors to adopt a more cautious and diversified investment strategy, the Indian real estate market continued to attract strong institutional interest.
A notable trend during the January-June 2026 period was the decline in average deal size by nearly 40%, from USD 133 million in H1 2025 to USD 80 million in H1 2026.
According to JLL, investors preferred spreading capital across a larger number of smaller transactions rather than concentrating exposure in a few large deals, reflecting a more risk-calibrated investment approach.
The biggest structural shift during the period was the unprecedented rise in domestic institutional participation. Domestic investors accounted for 64% of total institutional investments, the highest share ever recorded in India's real estate market.
Domestic institutional capital reached USD 2.8 billion, registering a robust 165% year-on-year growth, even as foreign institutional investments declined 37% amid global economic uncertainty, inflationary pressures, currency concerns and capital repatriation requirements.
"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," said Lata Pillai, Senior Managing Director & Head of Capital Markets, India, JLL.
She added that as geopolitical conditions stabilize, foreign investors are expected to step up investments in Indian real estate, creating a more balanced and resilient institutional investment ecosystem.
The report noted that domestic investors have increasingly shifted towards equity investments, with equity accounting for 83% of domestic capital deployment in H1 2026, compared with a more balanced debt-equity mix before 2025.
Domestic private equity funds and REITs together contributed 72% of domestic institutional investments during the period.
The office sector emerged as the biggest beneficiary of institutional capital, reclaiming the top position with a 54% share of total investments. Investments into office assets rose 34% year-on-year to USD 2.3 billion across 17 transactions.
Domestic investors dominated office investments as well, accounting for 89% of the capital deployed in the segment. JLL attributed the strong demand to India's expanding Global Capability Centre (GCC) ecosystem, stabilising return-to-office trends, attractive valuations and rental yields ranging between 7.8% and 8%.
Among cities, Bengaluru, Chennai and Delhi-NCR remained the country's leading investment destinations, together accounting for 46% of total institutional investment volumes during the first half of the year.
Looking ahead, JLL expects foreign institutional investors to gradually return as geopolitical risks ease and inflation moderates. Historically, the first half contributes about 50-52% of annual institutional investments, suggesting that total inflows for calendar year 2026 could reach USD 8.5-9 billion, provided market conditions remain supportive.
