Institutional investor confidence in Indian real estate remained upbeat in 2025, with capital inflows holding steady despite global trade frictions and macroeconomic uncertainties. Investments totalled USD 4.3 billion in the first nine months of the year and are projected to reach around USD 6 billion for the full year, underpinned by a growing domestic investor base, balanced foreign participation, and sustained strength in office and residential assets.

Looking ahead, the sector is poised for deeper institutionalization in 2026, driven by platform-led acquisitions, expanding REIT and SM-REIT participation, and a broader spread of capital across emerging asset classes and markets.

Office and residential segments will continue to dominate, contributing nearly 60% of total investments, supported by strong occupier activity and a healthy supply pipeline. Additionally, alternative and mixed-use assets are likely to witness significant capital allocation, together accounting for more than one-fifth of the inflows in the year.

2026 outlook: Investors can potentially drive greater institutionalization across asset classes

Institutional investments in Indian real estate are expected to strengthen at USD 6-7 billion in 2026, driven by a balanced interplay of foreign and domestic investors. While domestic investors will continue to expand their investment horizon, foreign inflows are expected to improve as cross-border investments pick pace. Core assets such as office and residential will remain dominant and will be complemented by uptick in investments across industrial & warehousing, alternatives and mixed-use developments. In 2026 and beyond, Indian real estate is set to enter a deeper phase of institutionalization, marked by platform-led acquisitions, strategic consolidations and expansion of REITs & SM-REITs. Furthermore, AIFs can gain traction and enhance liquidity, particularly in stressed assets. Overall, ESG compliance and sustainability-linked investments will remain central to capital allocation strategies, reinforcing India’s position as a high-potential market in the APAC region.

* Cross-border capital deployment in land & developmental assets to rise: Institutional investors in Indian real estate are pivoting towards build-to-core strategies, wherein assets are developed with a long-term intent of holding, rather than exiting. Global investors are likely to increasingly form joint ventures and participate in early-stage activities such as land acquisition and construction, particularly in quality office, residential and industrial & warehousing segments where demand fundamentals remain strong.

* Investments in retail & mixed-use segments to rise: Retail segment investments are set to rise in 2026, driven by Grade A malls with strong tenant mix, experiential formats, premium F&B outlets and entertainment zones. Mixed-use developments—combining retail, office, and hospitality spaces too will gain traction as developers and investors seek to maximize footfall, diversify income streams, and create integrated lifestyle destinations. Sustainability initiatives and tech-enabled ‘phygital’ experiences will further solidify global investor interest in the segment.

* Capital flows broadening towards emerging markets & multi-city portfolios: Institutional investors are expected to increase their focus on geographical diversification in the coming years. Building upon the momentum seen in recent years, multi-city deals are likely to account for 30-40% of the total inflows in 2026. While Tier I cities will continue to dominate real estate investments, emerging Tier II/III markets can witness greater capital deployment across flexible workspaces, co-living accommodation, senior housing, mixed-use developments, data centers etc.

* Building resilient portfolios through alternate strategies: Developers are likely to increasingly review their credit strategies and leverage structured debt and mezzanine finance products in the next few years. Debt platforms and private credit solutions can enhance liquidity and help in repositioning underperforming assets through ESG upgrades and adaptive reuse. These approaches signal a strategic pivot towards capital-efficient models that balance risks with value creation, ensuring real estate portfolios remain resilient and future-ready.

* Real estate filings and equity market listings to pick up: Real estate IPOs are expected to remain steadfast in 2026, building on the strong momentum of recent years. In the last 5 years, nearly 40 real estate IPOs have cumulatively raised more than INR 500 billion, with 2025 alone contributing nearly INR 180 billion, 30% up from the levels seen last year. Looking ahead, 2026 is likely to witness equally strong equity market listings from residential developers, housing finance companies, REITs, along with emerging categories like flex space operators and hospitality players as they scale operations and seek access to public markets.