India's real estate sector recorded institutional investments worth USD 4.5 billion during the first half of 2026, representing a 50% year-on-year increase and the strongest first-half performance in six years, according to Colliers India. The growth was supported by robust participation from both domestic and foreign investors despite continued global uncertainty linked to geopolitical tensions in West Asia and capital deployment challenges. 
Domestic investors emerged as the largest contributors during the period, investing USD 2.6 billion, an 80% increase compared with the corresponding period last year. Their investments accounted for 57% of total institutional inflows, reflecting continued confidence in the long-term prospects of the Indian real estate market. Foreign investments also recovered, rising 24% year-on-year to USD 1.9 billion, largely through strategic equity investments, stake acquisitions and allocations towards mixed-use and alternative assets. 
The second quarter witnessed particularly strong activity, with institutional investments rising 70% year-on-year to USD 2.9 billion. Domestic investors contributed USD 1.3 billion during the quarter, more than doubling from a year earlier and accounting for 46% of quarterly inflows. According to the report, balanced participation from domestic and overseas investors continued to support capital deployment across multiple asset classes. 
Office assets remained the preferred investment destination during the first half of the year, attracting USD 1.88 billion, or more than 40% of total institutional investments. Quarterly office investments reached USD 1.06 billion, almost four times higher than the same period last year, with domestic investors focusing primarily on operational office assets. 
Badal Yagnik, Chief Executive Officer and Managing Director of Colliers India, said domestic investors had consistently accounted for between 40% and 60% of real estate investments over recent quarters while expanding their portfolios across asset classes. He added that foreign investors, although becoming increasingly selective, were expected to continue allocating capital towards alternative and mixed-use developments, with the balance between domestic and international capital remaining important for the sector's next phase of growth. 
Mixed-use and alternative assets also recorded strong momentum. Each segment attracted approximately USD 0.8 billion during H1 2026, contributing nearly one-fifth of total institutional investments. Foreign investors led much of the activity in these categories through equity stake acquisitions, signalling continued interest in diversifying beyond conventional real estate sectors. 
In contrast, residential investments declined 43% year-on-year to USD 470.4 million, as developers and investors adopted a more cautious approach amid rising construction costs and moderating housing sales. Industrial and warehousing investments fell 38% to USD 191.4 million, while retail investments dropped 78% to USD 85.2 million. Hospitality investments, however, increased more than threefold to USD 279.6 million. 
Vimal Nadar, National Director and Head of Research at Colliers India, said office assets accounted for 37% of overall investment inflows during the second quarter, followed by mixed-use and alternative assets. He noted that investors continued to favour operational office properties and said the recent listing of another office REIT reinforced confidence in India's office market. He added that with office leasing expected to strengthen during the second half of the year, institutional investors were likely to remain positive on the sector throughout 2026. 
Geographically, Chennai and Bengaluru together attracted approximately USD 1.2 billion of investments during the first half, accounting for around 27% of total inflows. Office assets represented between 85% and 95% of investments in both cities. Multi-city transactions accounted for 46% of overall institutional investments, while Tier II and Tier III locations including Coorg, Hosur, Coimbatore, Kochi and Ujjain also witnessed notable capital deployment across hospitality, industrial and warehousing, and residential asset classes.