India’s office market is attracting a much larger share of real estate investment, with investors increasingly choosing income-generating commercial properties over residential projects despite an overall slowdown in private equity inflows.According to a Knight Frank India report, private equity (PE) investments in the country’s real estate sector fell 23 per cent year-on-year to $1.13 billion during January-June 2026, compared with $1.47 billion in the same period last year.However, the office segment bucked the trend, drawing nearly 89 per cent of all investments and recording a 33 per cent jump to $998 million from $579 million a year earlier.The report said the residential sector attracted only $128 million during the first half of 2026, down sharply from $297 million in the corresponding period last year, while the warehousing and retail segments did not witness any significant PE transactions.Knight Frank clarified, however, that the absence of deals does not necessarily indicate reduced investor interest in these asset classes.
NCR, Pune lead investment race
Among major cities, the National Capital Region (NCR) emerged as the biggest recipient of office investments at $363.8 million, followed by Pune with $308.8 million.Chennai attracted $154.7 million, Bengaluru received $115.9 million, while Mumbai recorded $54.6 million.The consultant attributed the office sector’s strong performance to sustained demand from Global Capability Centres (GCCs), multinational companies and domestic firms.India’s skilled workforce, cost competitiveness and growing strategic role in global business operations have continued to support office leasing activity.
Investors prefer ready office assets
The report also highlighted a clear shift in investor preference towards completed office assets. Ready-to-occupy properties accounted for around 75 per cent of office investments during the first half of 2026, up from 53 per cent a year earlier.According to news agency ANI, investors are increasingly favouring completed assets because they offer immediate rental income, lower execution risk and greater certainty of returns amid elevated global interest rates.Shishir Baijal, international partner, chairman and managing director of Knight Frank India, said, “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.”“Over the past few years, investors have witnessed a sharp rise in global borrowing costs, reducing the yield advantage that emerging markets traditionally enjoyed. Consequently, capital allocation decisions are increasingly influenced by factors such as execution certainty, taxation, liquidity and realised returns,” he added.Baijal said India’s office market continues to remain resilient due to strong occupier demand, expanding GCC operations and a growing supply of institutional-grade assets.He added that attracting larger pools of global capital in the future would depend on creating a more competitive investment framework alongside strong market fundamentals.