The office sector emerged as the strongest-performing asset class in Indian real estate during the first half of 2026, accounting for nearly 89% of all private equity investments, according to a report by Knight Frank India. Investments in this segment rose by 33% to USD 998 million, compared with USD 579 million in the same period last year.
Total PE Investments Decline Slightly
Total private equity investments in Indian real estate stood at USD 1.13 billion in H1 2026, marking a 23% year-on-year decline from USD 1.47 billion in H1 2025, as per the Knight Frank report titled 'Trends in Private Equity Investment in India: H1 2026'. The office sector remained the preferred asset class, while the residential sector absorbed the remaining investment.
City-Wise Office Sector Investments
The National Capital Region (NCR) recorded the highest private equity investment in the office sector among major Indian cities at USD 363.8 million. Pune followed closely with USD 308.8 million. Chennai and Bangalore secured moderate investment levels of USD 154.7 million and USD 115.9 million, respectively, while Mumbai recorded the lowest at USD 54.6 million. The total PE investment in the office sector across these cities amounted to USD 997.8 million.
Office Sector Boosted by GCC Demand
The report noted that the office sector continues to benefit from robust occupier demand led by Global Capability Centres (GCCs), multinational corporations, and domestic enterprises. India's large skilled workforce, cost competitiveness, and increasing strategic relevance in global corporate operations support this leasing momentum across major office markets.
Shift to Ready Office Assets
Investor preference shifted overwhelmingly toward ready office assets during H1 2026. Completed properties accounted for approximately 75% of total office investments, up from 53% in H1 2025. This sharp increase underscores an ongoing shift in global capital allocation strategies amid higher interest rates and elevated hurdle rates. As the yield advantage historically enjoyed by emerging markets narrows, investors prioritize assets capable of generating immediate and predictable cash flows. Ready assets offer greater income visibility, lower execution risk, and faster capital deployment.
Expert Commentary
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said, "The moderation in private equity investments during H1 2026 is largely a reflection of the evolving global capital environment rather than any deterioration in India's real estate fundamentals." He added, "Over the past few years, investors have witnessed a sharp rise in global borrowing costs, reducing the yield advantage that emerging markets traditionally enjoyed. Consequently, capital allocation decisions are increasingly influenced by factors such as execution certainty, taxation, liquidity and realised returns."
Resilience Amid Global Challenges
The moderation in investment activity reflects more selective capital deployment amid elevated global interest rates, tighter financial conditions, and heightened geopolitical uncertainty. However, the report underscored that this decline does not signal any weakening of India's real estate fundamentals. Rather, it points to an evolving global investment landscape, where institutional investors prioritize risk-adjusted returns, liquidity, and execution certainty over growth potential alone.
"Despite these challenges, India's office market continues to demonstrate remarkable resilience, supported by sustained GCC expansion, strong occupier demand and an increasing stock of institutional-grade assets," Baijal said. He further noted, "Looking ahead, India's long-term growth story remains compelling, but attracting larger pools of global capital will increasingly depend on creating a competitive investment framework that complements strong market fundamentals."
