Following a challenging global investment environment and evolving capital conditions, private equity investments in India's real estate sector declined 23% year-on-year to $1.13 billion during January-June 2026, according to property consultant Knight Frank India.
The private equity inflows into the sector stood at $1.47 billion during the same period last year. Despite the overall decline, office assets continued to dominate investor interest, accounting for nearly 89% of total private equity investments in the first half of 2026. The residential segment attracted the remaining equity inflows, news agency PTI reported, citing the report.
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Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, said the moderation in PE activity was primarily driven by the global investment environment rather than any weakness in India's real estate fundamentals. "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," Baijal said.
He added that rising global borrowing costs had reduced the traditional yield advantage offered by emerging markets, prompting investors to become more selective and focus on factors such as execution certainty, taxation, liquidity and realised returns.
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According to Knight Frank data, office sector PE inflows surged 33% to $998 million in H1 2026, compared with $579 million a year earlier. However, residential investments dropped sharply to $128 million from $297 million during the same period, as investors adopted a cautious approach towards development-led opportunities.
The warehousing and retail segments witnessed no major PE transactions during the period. However, Knight Frank said the absence of deals does not signal a decline in the attractiveness of these asset classes.
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