India real estate investment declines as domestic capital dominates

Private equity investment in Indian real estate fell 31 percent to $1.66 billion during the first nine months of 2026, according to a Knight Frank assessment. This decline coincides with a significant shift in investor composition: domestic institutions now account for 85 percent of investment, up from 25 percent the previous year, as foreign investors reduce their exposure.

The commercial sector shows mixed results. Office assets attracted $1.18 billion in private equity, the largest segment despite a 19 percent annual decline. Investors are increasingly prioritizing completed properties with established rental income over new construction projects. Meanwhile, the retail real estate market demonstrated growth, with space absorption rising 19 percent year-on-year to 5.8 million square feet in the same period.

Retail demand was led by domestic brands, particularly in the fashion and apparel sectors, which accounted for 39 percent of leasing. Major activity was concentrated in Delhi-NCR, Mumbai, and Hyderabad, which represented approximately 67 percent of total retail space take-up.