India’s Real Estate Sector Attracts $2.1 Billion in Institutional Investment in Q3, Up 20%

India’s real estate sector attracted $2.1 billion in institutional investment during the July-September quarter of 2026, up 20 per cent year-on-year and 12 per cent from the previous quarter, according to a report by Cushman & Wakefield released on Tuesday.

Foreign investors accounted for most of the capital deployed during the quarter, investing $1.4 billion, or 68 per cent of the total. Domestic institutions contributed the remaining $700 million, representing 32 per cent of investments.

The latest figures mark a shift in investment patterns after four consecutive quarters in which domestic investors led institutional activity.

Foreign capital drives quarterly investment growth

Foreign investment in Indian real estate increased 64 per cent quarter-on-quarter and 134 per cent year-on-year in the third quarter of 2026.

In contrast, domestic institutional investment fell 34 per cent from the previous quarter and 39 per cent from the year-ago period. The report attributed the moderation partly to a high base of domestic investment during the corresponding and preceding periods.

Despite the quarterly shift, cumulative institutional investment remained broadly balanced between domestic and international sources.

Total institutional investments reached $5.5 billion in the first nine months of 2026, up 11 per cent year-on-year. Domestic investors accounted for 52 per cent of this amount, while foreign investors contributed 48 per cent.

Over the year-to-date period, domestic investment grew 15 per cent year-on-year, while foreign investment increased 8 per cent, indicating continued participation from both investor groups despite global economic uncertainty.

Data centres emerge as the leading investment destination

Data centres attracted the largest share of institutional capital during the third quarter, accounting for 52 per cent of total investment activity. The sector moved up from second place in the previous quarter.

The growing allocation reflects investor interest in India’s digital infrastructure, supported by rising demand for artificial intelligence workloads, cloud computing and data localisation.

Hospitality accounted for 15 per cent of quarterly investments, followed by the office segment at 9 per cent.

The concentration of capital in data centres highlights the increasing importance of technology-related infrastructure within the broader commercial real estate investment market.

Investors favour diversified portfolios

Investors continued to favour geographically diversified strategies, with transactions spanning multiple cities accounting for 76 per cent of total institutional investment activity during the quarter.

Mumbai attracted 9 per cent of quarterly investments, while Delhi-NCR accounted for 6 per cent, according to the report.

Somy Thomas, Executive Managing Director for Capital Markets at Cushman & Wakefield, said investors remained selective in their deployment strategies, with capital flowing towards opportunities offering scale and long-term growth potential.

“The higher share of foreign capital this quarter reflects the attractiveness of India's real estate sector and the breadth of opportunities available across asset classes,” Thomas said.

Private equity funds and REITs expected to remain active

The report expects private equity funds and real estate investment trusts (REITs) to continue expanding their portfolios through strategic investments.

The combination of foreign capital inflows, continued domestic participation and growing interest in specialised assets such as data centres points to a changing investment landscape for Indian real estate.

However, the distribution of capital across asset classes and markets suggests that investors are prioritising opportunities aligned with long-term demand, scale and portfolio diversification rather than deploying funds uniformly across the sector.