India Real Estate Draws $2.1 Billion in Institutional Investments in Q3, Up 20%

Institutional investment in India's real estate sector rose 20 per cent year-on-year to $2.1 billion in the third quarter of 2026, driven by a sharp recovery in foreign capital inflows and growing investor interest in digital infrastructure, according to a report by Cushman & Wakefield.

Investments also increased 12 per cent quarter-on-quarter, signalling continued confidence in the sector despite global economic uncertainties.

Foreign investors accounted for $1.4 billion, or 68 per cent of the total investment during the July-September quarter. Domestic institutional investors contributed the remaining $700 million, representing 32 per cent of the overall inflows.

The quarter marked a shift in investment trends after four consecutive quarters in which domestic investors had led capital deployment. Foreign investments surged 64 per cent from the previous quarter and 134 per cent compared with the same period last year.

In contrast, domestic investment declined 34 per cent quarter-on-quarter and 39 per cent year-on-year, reflecting a moderation following substantial capital deployment in the comparable periods.

Despite the quarterly slowdown, the broader investment picture remained positive. Institutional investments in Indian real estate reached $5.5 billion during the first nine months of 2026, an increase of 11 per cent over the corresponding period last year.

Domestic investors accounted for 52 per cent of year-to-date investments, while foreign investors contributed 48 per cent. Domestic capital deployment grew 15 per cent year-on-year, compared with an 8 per cent increase in foreign investments.

The data centre segment emerged as the biggest beneficiary during the third quarter, attracting 52 per cent of total institutional inflows and moving up from second place in the preceding quarter.

The strong showing reflects growing investor interest in India's digital infrastructure, supported by rising demand for artificial intelligence (AI) computing, cloud services and data localisation. As businesses and digital platforms require greater computing capacity and secure data storage, data centres are increasingly attracting institutional capital.

The hospitality sector ranked second, accounting for 15 per cent of quarterly investments, followed by office properties at 9 per cent.

Somy Thomas, Executive Managing Director, Capital Markets, at Cushman & Wakefield, said investors continued to be selective, directing funds 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.

Investment activity also reflected a preference for diversification across locations. Multi-city transactions accounted for 76 per cent of total institutional investment during the quarter, indicating that investors continued to seek exposure across multiple markets rather than concentrate their portfolios in a single city.

Mumbai received 9 per cent of quarterly investments, followed by Delhi-NCR with 6 per cent.

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

The latest figures underline the evolving nature of institutional investment in Indian real estate, where traditional assets such as offices and hospitality properties are competing for capital with emerging segments such as data centres. The resurgence in foreign investment during the quarter also points to sustained international interest in India's long-term real estate growth prospects.