Despite a surge in the number of transactions, which rose 29% year-on-year from 25 in the first quarter of 2026, to 31 in January-September 2026 - private equity - PE investment in the Indian real estate market dipped 31% year-on-year to $1.66 billion, according to Knight Frank India. Domestic investors were the source of 85% of total inflows, representing a significant change in the source of capital in a tougher environment in terms of less high value transactions and increased preference for assets with steady income streams and lower development risk.

Key Highlights

• Indian real estate private equity investment fell 31% to $1.66 billion, despite transaction numbers increasing 29% during January-September 2026.
• Domestic investors contributed 85% of real estate PE inflows, while office assets attracted 71% of total investment.

At the same time in 2025, PE investment totaled $2.41 billion in 24 transactions. The average size of deals disclosed dropped 47 percent to $53 million, as no large deals were announced to boost investment volumes last yea

India Real Estate PE Investment Falls 31% in 9M 2026

Transaction activity has grown, but PE investment fell, according to Knight Frank India's analysis of the Capital Market in the 3Q 2026. Investment decreased 43% year on year to $530 million in July-September 2026, with the number of deals up 25% to 15.

The direction of the market suggests an evolution in investor focus: more money is being invested in specific assets than in big purchases. While the headline statistics were important, so, too, was the real estate investment landscape evolving, said Shishir Baijal, Chairman Managing Director, Knight Frank India, citing the rising share of domestic capital and investors' preference for risk and returns.

Domestic Investors Account for 85% of Real Estate PE Inflows

Domestic investors injected $1.42 billion into Indian real estate in the first nine months of 2026, up from $603 million in the same period last year. They accounted for 85% of the total investment as compared to 25% in the corresponding period of 2025.

Domestic capital was 94% of residential investment and 81% of office investment. It also paid for the only warehousing transaction that occurred during the period.

Foreign investors provided $240 million in investment, of which 92% was in the form of equity. Foreign investors were expected to be selective due to higher global expectations for returns and currency adjusted returns, Knight Frank said.

Office Assets Attract 71% of Real Estate PE Investment

During the January-September period of 2026, the office sector saw $1.18 billion in transactions, with 71% of all real estate PE investment coming from the sector. However, inflows declined 19% year-on-year.

Office completed assets represented 78% of office investment, while a year ago it was 49%. The segment's equity share of capital deployed showed a preference for completed properties with proven income-producing potential and less development risk - with 88% of capital deployed in this category.

Residential investment fell 33% to $320 million, accounting for 20% of the inflows. Debt and structured credit made up 97% of residential investments and 83% of the capital was invested in under-construction projects. Residential investment was 63% of the National Capital Region (NCR).

Also Read: India's Office Leasing Hits Record 61.06 Million Sq Ft in 2026

Warehousing Investment Rises 66%, Retail Receives No PE Funding

Warehousing investment jumped 66% YOY to $160 million, all on one completed transaction in the third quarter.

The retail real estate segment, on the other hand, didn't see a single private equity transaction in the first nine months of 2026, versus $374 million in the 12-month period ending in September 2025.

The divergence reflects the disparity in investment by property type, and the different types of properties that investors are investing in, rather than investing across the market in a uniform manner.

NCR Leads Real Estate PE Investment, Followed by Pune and Chennai

The capital region accounted for 34% of the total real estate PE inflows, with $568 million.Total real estate PE investments by geography was led by the capital region, with $568m or 34 % of the total.

The top three cities in terms of revenue are Pune, with $356 million, followed by Chennai at $319 million, and then Mumbai at $276 million, followed by Bengaluru at $137 million.

Knight Frank believes investment will remain “eager to be picky” on the quality of assets, risk allocation and the returns on currency adjusted. Foreign investors are expected to be selective and so is the domestic capital that's increasingly contributing to the real estate investment scenario of the country.