Pune: India’s real estate market is valued at $600 billion, with projections of $1 trillion by 2030 and $5.8 trillion by 2047, as domestic capital gains momentum alongside foreign investment.
Real Estate Investment in India has gathered momentum in 2026, with private equity (PE) investments reaching $6.1 billion in the first nine months of the year, according to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Anarock Research and Advisory.
Data centres attracted $2.5 billion in private equity investments during the period, followed by office assets at $1.7 billion.
The report, titled The Changing Landscape of Real Estate Investment in India, published in October 2026, highlights a structural shift in the sector, with foreign institutional capital continuing to support the market while domestic investment grows rapidly.
The findings point to expanding investment opportunities across residential real estate, commercial offices, data centres, industrial and logistics facilities, hospitality and other specialised asset classes.
The report also projects that the Indian real estate market, valued at $600 billion in 2025, will reach $1 trillion by 2030 and $5.8 trillion by 2047.
Its contribution to India’s gross domestic product (GDP) is expected to increase from approximately 6% in 2017 to 13% by 2030.
Real Estate Investment in India Sees Strong Private Equity Activity
Private equity investment in Indian real estate has remained resilient despite economic and financial disruptions over the past two decades.
According to Anarock, annual PE investment reached $6.9 billion in 2025, while the first nine months of 2026 recorded $6.1 billion across 55 disclosed deals.
Data centres emerged as the leading investment destination during the period, attracting $2.5 billion, while office assets received $1.7 billion.
The report also notes that investment deals have become larger, with transactions valued above $100 million accounting for 76% of private equity investment value between 2021 and 2025, compared with 44% between 2011 and 2015.
Real Estate Investment in India has also witnessed a growing preference for platform-level investments, in which investors commit capital to broader portfolios or businesses rather than individual projects.
- Entity-level transactions accounted for 27% of investment value between 2021 and 2025, up from 15% between 2011 and 2015.
- Private equity inflows stood between $3.7 billion and $4.4 billion annually from FY22 to FY26.
- In the first half of FY27, inflows increased 23% year-on-year to $2.7 billion, marking the strongest first half since H1 FY23.
- The average deal size rose 18% to $91 million during the same period.
Real Estate Investment in India: Domestic Capital Emerges as a Second Growth Engine
One of the key developments in Real Estate Investment in India is the growing contribution of domestic funds.
While foreign investors continue to provide a substantial share of capital, domestic investment has expanded significantly, creating two major sources of funding for the sector.
Foreign private equity investment increased from $2.5 billion in 2021 to $4.9 billion in 2025, representing annual growth of approximately 19%.
Foreign investment reached $3.1 billion in the first nine months of 2026.
Domestic funds, meanwhile, increased their investments from $400 million in 2020 to $1.8 billion in 2025 and $2.6 billion in the first nine months of 2026.
Their share of private equity investment value rose from 8% in 2020 to 42% in the first nine months of 2026.
During H1 FY27, domestic investors accounted for 48% of private equity inflows, compared with 16% in FY25.
Equity investments also increased to 83% of inflows, while the share of structured debt declined from 32% in FY23 to 16% in H1 FY27.
Real Estate Investment in India: AIFs are playing an increasingly important role in this shift.
AIF commitments increased from ₹3,47,802 crore in December 2019 to ₹17,53,070 crore in June 2026, while investments made by AIFs crossed ₹7,10,000 crore.
Real estate remained the largest identified sector in AIF portfolios. Its share of AIF investments reached approximately ₹1,28,000 crore, or 19% of investments, in March 2026.
The report also highlights the role of listed real estate companies and Real Estate Investment Trusts (REITs) in mobilising capital and providing exit opportunities for investors.
Between 2021 and the first nine months of 2026, mainline initial public offerings (IPOs), real estate qualified institutional placements (QIPs) and REIT QIPs collectively raised ₹37,794 crore.
Real Estate Investment in India: MMR Leads, While Tier II Cities Gain Ground
Geographically, Real Estate Investment in India continues to concentrate in major metropolitan markets while expanding into smaller cities and peripheral urban areas.
- The Mumbai Metropolitan Region (MMR) accounted for 49% of private equity investment value between 2021 and 2025, compared with 39% between 2016 and 2020.
- Bengaluru’s share declined from 31% to 18% over the same periods, partly because large platform transactions are recorded at the target company’s headquarters.
The report identifies major cities as the primary centres of demand for offices, retail properties and data centres. Mumbai alone accounted for 53% of operational data centre capacity.
At the same time, Tier II markets are gaining investor attention. The number of private equity deals in Tier II cities increased from 11 during 2016–2020 to 20 during 2021–2025, spanning 12 cities compared with eight in the earlier period.
During the first nine months of 2026, transactions were recorded in cities including Udaipur, Lucknow, Goa, Jaipur and Vadodara. Hospitality and data centres are among the asset classes supporting this expansion.
According to the report, 45% of branded hotel keys signed in the first half of 2026 were in Tier III and Tier IV cities, up from 40%.
- Data centre capacity in Tier II cities is expected to exceed 100 MW by the end of 2026, with another 1.4 GW to 1.6 GW of capacity planned outside the six largest cities.
- Multi-city investment platforms are also gaining traction.
- Pan-India and multi-city transactions accounted for 49% of private equity investment value in H1 FY27, supported by large investments in data centres and hospitality.
- Among single-city investments, Bengaluru accounted for 17% of inflows, while Pune’s share nearly doubled to 11%.
Real Estate Investment in India: Data Centres, Offices and Logistics Reshape Investment Priorities
The changing composition of Real Estate Investment in India reflects a shift from conventional property development towards income-generating assets and specialised operating platforms.
Data centres accounted for 40% of private equity investment during the first nine months of 2026, according to the report’s overview. In H1 FY27, data centres represented 29% of private equity inflows, compared with 4% in FY26.
Office assets remained the largest category in H1 FY27, accounting for 35% of inflows, while hospitality returned with a 12% share.
India’s data centre stock crossed approximately 1,700 MW in 2025, following the addition of a record 440 MW of capacity. The market is expected to expand by around 30% to approximately 2,200 MW in 2026.
Office demand has also strengthened. Gross office absorption across the top seven cities reached a record 80.5 million square feet in 2025, up 103% from 39.6 million square feet in 2021.
Net absorption reached 58.2 million square feet, exceeding new completions since 2024. Gross absorption for 2026 is projected at 74.9 million square feet.
The profile of office occupiers is changing as well. The share of information technology and IT-enabled services in office leasing declined from 41% in 2021 to 27% in 2025.
- Coworking operators and banking, financial services and insurance (BFSI) companies accounted for a growing proportion of leasing activity.
- Industrial and logistics properties are another expanding segment. Grade A warehousing stock across the top eight cities doubled from 135 million square feet in 2021 to 278 million square feet in 2025.
The report projects this stock will reach 480 million square feet by 2028, implying annual growth of approximately 20%.
- Third-party logistics companies accounted for 36% of warehousing leasing, followed by e-commerce at 18% and automobile and engineering companies at 14%.
- Private equity investment in logistics between 2021 and 2025 was 3.2 times the level recorded during the preceding five years.
Retail and hospitality markets are also attracting attention.
- Grade A mall absorption reached a record 13 million square feet in 2025, compared with new completions of 5.2 million square feet.
- Retail vacancy declined to 6.7%, from 20.2% in 2010.
India’s hospitality sector recorded year-on-year growth in June 2026, supported by domestic demand.
- Average room rates increased by 10% to 12% to ₹7,900–₹8,100, while occupancy reached 64%–66%.
- Revenue per available room increased by 17% to 19% to ₹5,056–₹5,346.
Real Estate Investment in India: Residential Real Estate Records Higher Sales Value
Residential property remains a major component of Real Estate Investment in India, although the report identifies a changing mix of supply and funding.
Residential sales value across the top seven cities reached a record ₹6,09,621 crore in FY26, more than double the ₹2,34,841 crore recorded in FY22. In H1 FY27, sales value reached ₹2,92,210 crore, approximately half the report’s FY27 projection of ₹5,82,368 crore.
During the first half of FY27, developers launched 2,20,313 residential units and sold 1,90,933 units, with launches running approximately 15% ahead of sales. Sales value increased 12.4% quarter-on-quarter to approximately ₹1,54,000 crore in Q2 FY27.
The report also highlights a shift towards higher-priced housing. High-end, luxury and ultra-luxury homes accounted for 45% of new residential supply in FY26, compared with 13% in FY22.
- The share of affordable housing declined from 25% to 14% over the same period.
The Mumbai Metropolitan Region remained the largest residential market, accounting for approximately 35% of sales value. Hyderabad reached 56% of its FY26 residential sales value during the first half of FY27.
In terms of funding, domestic investors have become increasingly important in residential real estate. Indian funds accounted for 61% of residential private equity investment value between 2021 and 2025, increasing to 69% when co-investments were included.
The report also identifies rental housing, co-living, student accommodation and senior living as emerging investment formats. Institutional platforms worth ₹1,000 crore for rental housing and ₹2,000 crore for senior living were established in 2026.
Real Estate Investment in India: Funding Gaps and Construction Finance
Despite the sector’s expansion, access to early-stage financing remains a challenge.
According to the report, banks primarily lend against approved projects under construction, leaving land acquisition, approvals and pre-development activities dependent on promoter equity, private equity, AIFs and non-banking financial company (NBFC) credit.
The report notes that the Real Estate (Regulation and Development) Act, or RERA, requires 70% of buyer collections to be held in project escrow accounts. While this mechanism protects buyers, it limits the use of those funds for acquiring land for other projects.
Against this backdrop, the report expects three financing models to gain importance: platform equity for funding a pipeline of projects, structured private credit for land acquisition and project completion, and lease-backed financing through lease rental discounting, REITs and small and medium REITs.
In H1 FY27, nearly 90% of residential private equity investment was structured debt, largely directed towards smaller-ticket project-completion financing.
The report also highlights the importance of improving access to capital for projects at different stages, from land acquisition and approvals to construction and stabilisation.
Capital recycling through REITs and other lease-backed structures is identified as an important mechanism for releasing funds from completed assets.
Real Estate Investment in India: Outlook to 2030 and Beyond
The report’s long-term outlook points to a market supported by rising incomes, new-economy employment, institutional investment and demand for specialised real estate assets.
India’s real GDP grew 7.6% in 2025, while per capita net national income increased from ₹86,650 in FY15 to ₹2,08,090 in FY26, a 2.4-fold rise.
The number of recognised startups increased from 471 in 2016 to approximately 2.3 lakh by September 2026, supporting demand for office space, coworking facilities and housing.
According to the report, funding the next ₹10 lakh crore in real estate investment will require contributions from multiple sources rather than private equity alone. At the investment pace recorded between 2021 and 2025, private equity could supply approximately $55 billion over a decade.
AIF commitments, listed equity, REITs, government-backed funds, construction credit and buyer funding are expected to play complementary roles.
The report identifies the next phase of Real Estate Investment in India with institutional depth, larger investment platforms, a stronger domestic capital base and greater focus on operating assets such as data centres, logistics parks, hotels and senior living.
It also highlights the need for faster approvals, single-window clearances, predictable land policies and reliable power connections to support construction and reduce delivery costs.
Expanding connectivity and governance in Tier II cities and urban peripheries is identified as important for extending investment beyond the largest metropolitan markets.
The report concludes that the future of the sector will depend on the convergence of capital, demand and policy, with institutional investors and domestic savings expected to play an increasingly important role in shaping India’s real estate market.
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