Private equity (PE) investments in Indian real estate declined 23% year-on-year to $1.1 billion in the first half of 2026, according to a report by real estate consultancy firm Knight Frank India. The drop reflects cautious investor sentiment amid global economic uncertainties and rising interest rates.
Bengaluru Emerges as Top Investment Destination
Bengaluru recorded $115.9 million in PE investments during the period, underpinned by sustained expansion of global capability centers (GCCs) and its position as India's leading technology and office market. The city accounted for the largest share among Indian metros, driven by demand for Grade A office spaces from multinational corporations.
Mumbai and Delhi-NCR followed with $98.2 million and $72.5 million respectively, though both saw declines compared to the same period last year. Knight Frank attributed the overall dip to a slowdown in deal closures in the residential and retail segments.
Sectoral Breakdown and Investor Preference
The office segment attracted the bulk of PE inflows at 62%, totaling $682 million, as investors focused on stabilized assets with strong rental yields. The industrial and logistics sector received $231 million, while residential real estate accounted for only $132 million, reflecting a shift away from development-stage projects.
According to Shishir Baijal, Chairman and Managing Director of Knight Frank India, "Investors are prioritizing income-generating assets in core markets like Bengaluru. The GCC boom continues to fuel demand for office spaces, but overall deal activity has moderated due to valuation mismatches and global headwinds."
Outlook for Second Half of 2026
The report noted that PE investments are expected to pick up in the second half of 2026, with several large-ticket deals in the pipeline, particularly in the data center and warehousing segments. However, the full-year figure may still fall short of the $3.2 billion recorded in 2025.
Knight Frank highlighted that foreign investors remained net buyers, contributing 71% of total PE inflows, while domestic investors accounted for the rest. The average deal size declined to $45 million from $58 million in H1 2025, indicating a preference for smaller, less risky investments.
