Global funds retreat from Indian realty amid rising uncertainty

Institutional real estate inflows plunge 61% to $1.6 billion, signalling slowdown despite strong domestic demand

Foreign investment into India’s real estate sector plunged 75% during January–March 2026, as escalating tensions in West Asia and global market volatility triggered a sharp pullback by overseas investors, according to Colliers India.

Foreign inflows dropped to just $400 million in the first quarter, compared with $1.6 billion in the preceding October–December period. The steep decline reflects heightened caution among global investors amid rising geopolitical risks, volatile commodity prices and uncertain trade conditions. Overall institutional investment in Indian real estate also fell significantly, declining 61% to $1.6 billion in Q1 2026 from $4.2 billion in the previous quarter. The data underscores a broader slowdown in capital inflows, despite strong underlying domestic demand.Domestic investors, however, emerged as a stabilising force. They contributed $1.2 billion during the quarter, accounting for nearly three-fourths of total inflows. This marks a sharp rise from $2.6 billion recorded in the preceding quarter, indicating increased confidence among local players even as global funds retreated.

Badal Yagnik, CEO and MD, Colliers India, said institutional investments continue to show resilience, driven largely by domestic participation across asset classes. He noted that while global investors remain cautious due to volatility in trade, crude and commodity markets, the current phase is likely temporary. The report highlighted that global investors are expected to adopt a wait-and-watch approach in the near term, potentially weighing on inflows over the next few quarters. 

However, strong domestic fundamentals — including favourable demographics, rising consumption and diversified asset opportunities — are likely to support India’s long-term attractiveness in the Asia-Pacific region.Across segments, office assets witnessed a sharp decline in investment activity. 

Institutional inflows into office properties dropped to $821.1 million in Q1 2026 from $3,051.8 million in the previous quarter, reflecting subdued global appetite for commercial real estate. Colliers noted that institutional investments comprise capital from alternative investment funds, private equity players, sovereign wealth funds, REITs, family offices and foreign-funded financial institutions.