India’s institutional real estate market displayed resilience in the first half of 2026, attracting nearly $4.3 billion through a record 54 transactions, marking a 23% increase year-on-year. A report by JLL highlighted that domestic institutional capital contributed 64% of the total flows, the highest share recorded. This amounted to about $2.8 billion, compensating for a 37% decline in foreign institutional investment.
The growth, primarily fueled by domestic PE players and REITs, indicates the initial stages of India’s domestic investment landscape maturation, reducing susceptibility to external shocks, according to Lata Pillai, Senior Managing Director & Head of Capital Markets, India, JLL. With geopolitical conditions stabilizing, Pillai anticipated a rise in foreign investors deploying capital in India’s real estate sector.
The synergy between strengthening domestic institutional foundations and increased international involvement is expected to drive higher institutional capital flows, establishing a more balanced and resilient investment environment. Following a subdued first half of 2025, the market demonstrated remarkable resilience with a strong rebound in the second half of 2025, resulting in a record-breaking $10.5 billion in institutional investments for the year.
In the first half of 2026, average deal sizes decreased by 40% to $80 million as investors diversified capital across more, smaller transactions to manage risks effectively. Domestic institutional capital saw a significant 165% year-on-year surge, amounting to $2.8 billion during this period. The decline in international capital reflects a cautious approach by foreign investors, possibly influenced by global economic uncertainties, currency fluctuations, risk repatriation needs, and rising inflation in major economies housing international institutional capital sources.
The reduced reliance on foreign capital signifies enhanced market stability and decreased vulnerability to external shocks originating from global financial markets, as highlighted in the report. The dominance of equity has been largely driven by domestic private equity funds and REITs, accounting for 72% of domestic institutional capital in the first half of 2026. The increasing importance of REITs has accelerated a shift towards core asset acquisitions, a trend that gained momentum in 2025 and continued robustly into the first half of 2026.
