Office assets anchor institutional confidence as PE investments rise in March quarter

Synopsis

Office properties led institutional investment in India's real estate during the first quarter of 2026. Private equity inflows saw a significant increase, with office assets attracting the majority of capital. Investors favored stabilized, income-generating properties. Residential investments remained debt-led. The National Capital Region and Pune attracted most of the investment. Domestic capital played a dominant role.

Office properties continued to anchor institutional investment activity in India’s real estate sector in the first quarter of 2026, driving private equity inflows even as overall deployment remained selective.

The concentration of capital in office assets reflects a clear investor preference for stabilised, income-generating properties with predictable cash flows.

Private equity investments in Indian real estate stood at $637 million across nine transactions during the quarter, marking a 2.1-fold increase from $300 million recorded in the year-ago period, showed data from Knight Frank India.

The increase in activity was led by office assets, which accounted for $529 million, or 83% of total investments, across four deals. Three of the four deals were structured as equity investments, indicating improving confidence in pricing and leasing fundamentals in key markets.

“The opening quarter of 2026 confirms a direction if not yet a velocity. The doubling of PE investment volumes relative to Q1 2025, combined with a decisive tilt toward ready office assets and structured residential credit, suggests that investors are increasingly comfortable with the risk-return profile in select segments,” said Shishir Baijal, International Partner, CMD, Knight Frank India.

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The broader recovery in 2026, which he expects to build through the year, will depend on how quickly valuation alignment improves in the development pipeline and whether the macro environment remains supportive.

“The dominance of office investments this quarter highlights a clear institutional preference for predictable cash flows and stabilised income-generating assets. In a selective deployment environment, leased and near-stabilised office properties offer better visibility on yields and lower execution risk. We are also looking at select greenfield commercial opportunities where strong sponsors, proven micro-markets, and leasing potential can create meaningful value over the medium term,” said Anand Lakhotia, MD & Co-Head of Real Estate Fund at Motilal Oswal Alternates.

All office transactions during the quarter involved leased or near-stabilised assets, underscoring a continued focus on yield visibility and asset-level security over development exposure.

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Residential investments stood at $108 million across five transactions, contributing 17% of total activity, and remained largely debt-led, with four deals structured as credit. This reflects a continued preference for downside protection in a segment where exit timelines remain less predictable.

Investment activity during the quarter was highly concentrated geographically. The National Capital Region (NCR) attracted $411 million, accounting for 65% of total inflows, while Pune drew $203 million, or 32%. Mumbai saw limited activity at $23 million, while a transaction in Bengaluru involving a Japanese investor was concluded at an undisclosed value.

Domestic capital continued to play a dominant role, contributing $510 million, or 80% of total investments, effectively anchoring activity amid ongoing global uncertainty. Foreign capital, at $128 million, remained selective and largely focused on stabilised assets due to factors such as currency hedging costs and valuation gaps.

Industry stakeholders expect investment activity to broaden through 2026 as pricing expectations align, with office assets likely to remain central to institutional portfolios in the near term.

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