India’s real estate market has shown strong support from local investors, who have outpaced foreign investments for three straight quarters. In the past three quarters, domestic investors have taken the lead, moving from about 63% (around USD 1.1 billion) in Q3 2025 to around 81% (USD 2.7 billion) in Q4 2025, and staying at a notable 76% (USD 1.2 billion) in Q1 2026. This trend indicates a growing trust in real estate by local investors, marking a significant change in how capital is flowing into investments.
According to the latest Capital MarketBeat report for Q1 2026, total institutional investments in India reached USD 1.6 billion this quarter, showing a 26% increase from the previous year but a 52% drop compared to the last quarter. Domestic investors led the way with USD 1.2 billion, which made up 76% of the total, while foreign investments accounted for USD 0.4 billion, or 24%.
For four out of the last five quarters, local investors have taken a larger slice of the investment pie. This steady rise in domestic capital is crucial as foreign investments remain cautious due to global economic and political factors. The growing presence of local capital is helping maintain stability in the investment landscape.
Overall, institutional investment trends during Q1 2026 demonstrate significant activity in the Indian real estate sector. The quarter’s performance reflects the highest first-quarter investment since 2021.
Private Equity (PE) has been the main avenue for these investments, making up 74% of total inflows, while Real Estate Investment Trusts (REITs) contributed the remaining 26%. The office sector attracted the largest share, pulling in USD 1.0 billion, which is 64% of total investments. The hospitality sector followed with 13%, and the residential sector accounted for 9%, highlighting the ongoing importance of commercial real estate.
Regionally, the Delhi NCR area captured 28% of the investment for the quarter, with Chennai and Bengaluru at 17% and 14%, respectively, showcasing a strong interest across major cities.
Somy Thomas, an Executive Managing Director in Capital Markets, shared insights on the trends:
“The growing influence of domestic capital represents a turning point for India’s real estate investment scene. We are witnessing a fundamental shift driven by increasing confidence in market stability and a more disciplined approach to investments. Domestic capital has particularly favored the office sector, and this trend is expected to continue as the sector shows solid performance in leasing and occupancy. Additionally, the stable returns from REITs are boosting investor confidence in real estate as a reliable asset, especially compared to the fluctuations in equity markets. Thus, real estate is gradually becoming a central part of local investment strategies, a trend we anticipate will persist moving forward.”
