Mumbai, Nov. 2 -- Private equity (PE) investments in India's real estate sector declined 31 per cent year-on-year to $1.66 bn during the first nine months of 2026, according to a report by real estate consultancy Knight Frank. The decline was driven by a sharp fall in foreign investment amid higher return thresholds in overseas markets and the rupee's depreciation.
Overall inflows fell from $2.41 bn in January-September 2025 to $1.66 bn in the corresponding period this year, the lowest level in six years. Foreign investment dropped to $243 mn from $1.81 bn, reducing its share of total PE inflows to 15 per cent from 75 per cent a year earlier, and marking its lowest level since 2012.
Knight Frank said foreign investors were directing more capital towards developed real estate markets in the United States and Europe, as well as select Asian economies, where they saw better return opportunities. The narrowing gap between Indian and US bond yields also made investors more selective, particularly towards under-construction projects.
Domestic investors more than offset the decline in overseas capital, contributing $1.42 bn during the period compared with $603 mn a year earlier. Their share of total investment rose to 85 per cent from 25 per cent, reflecting a shift away from the historical dominance of foreign capital and greater focus on the size, structure and risk of individual commitments.
The number of transactions increased to 31 from 24, but the average disclosed deal size fell 47 per cent to $53 mn because large-ticket transactions were absent. Investments in the office segment stood at $1.18 bn, down 19 per cent, while completed assets accounted for 78 per cent of total inflows, up from 49 per cent in the first nine months of 2025. Knight Frank said a recovery in foreign investment would depend on greater stability in global interest rate expectations and clearer returns after borrowing costs and currency movements are considered.
Published by HT Digital Content Services with permission from Construction World.