New Delhi [India], October 28 (ANI): Private equity (PE) investment in India’s real estate sector declined 31 per cent year-on-year to USD 1.66 billion during January-September 2026, even as the number of deals increased, according to a report by Knight Frank India.
The sector recorded 31 transactions during the nine months, compared to 24 in the same period last year. However, the average deal size fell 47 per cent to USD 53 million, as there were fewer large-value transactions. Total institutional investment during the period was the lowest in six years.
Domestic investors accounted for 85 per cent of the total investment, contributing USD 1.42 billion, compared to 25 per cent or USD 603 million a year ago. Meanwhile, foreign investment fell to USD 240 million, accounting for 15 per cent of the total, against a 75 per cent share in the corresponding period last year.
Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, said domestic investors were playing a bigger role in the real estate market as investors became more selective about their investments.
“The changing composition of real estate investment is as important as the headline numbers. Domestic capital is playing a much larger role now, contributing 85% of total PE investments in real estate, while investors are becoming more deliberate about the size, structure and risk of each commitment,” Baijal said.
He said investment decisions were increasingly driven by the returns investors expected and the risks involved.
“This is not simply a question of capital becoming available or unavailable; it is about where investors see returns that justify the risks. Completed office assets and structured residential credit reflect different approaches to that calculation,” he added.
Baijal further said India’s ability to attract foreign capital would depend on the availability of quality investment opportunities, transparency and investor confidence in the country’s long-term economic fundamentals.
The office sector attracted the largest share of investment at USD 1.18 billion, accounting for 71 per cent of the total, although inflows declined 19 per cent year-on-year. Completed office projects accounted for 78 per cent of investments in the segment, while equity investments made up 88 per cent.
The residential sector attracted USD 320 million through 19 deals, registering a 33 per cent decline. Debt and structured credit accounted for 97 per cent of residential investments, with 83 per cent of the funds directed towards under-construction projects. The National Capital Region (NCR) received 63 per cent of total residential investment.
The warehousing sector recorded USD 160 million in investment through a single deal in the July-September quarter, while the retail sector did not record any transactions during the nine months.
Among cities, the NCR led with USD 568 million in real estate private equity investment, followed by Pune at USD 356 million and Chennai at USD 319 million, the report said. (ANI)
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