India’s real estate capital markets hit record $4.3b in FY26 recovery

India’s real estate capital markets witnessed a decisive recovery in FY26, shaking off two years of subdued activity to reclaim levels last seen in FY22. The sector recorded total deal value of $4.3 billion — a 13 per cent and 16 per cent rise over FY24 and FY25, respectively — with the uptick underpinned by a far healthier, broad-based deal environment than in previous years, according to Anarock Capital’s FLUX FY26 annual edition.

“FY26’s recovery is especially significant for its quality. Unlike FY24 and FY25 - where a single mega-transaction accounted for 37% and 41% of total deal value - the largest deal in FY26 contributed just 9% of total activity. This marks a structural improvement in market depth, with capital flows distributed more evenly across geographies, sectors, and asset classes,” said Shobit Agarwal, CEO, Anarock Capital.

The number of transactions rose to 60 in FY26, the highest in seven years and up sharply from 41 deals in FY25. Average deal size, at $71 million, was the lowest in the same period — a reflection not of declining appetite, but of wider market participation with more players transacting across a broader ticket-size spectrum.

Equity continued to be the preferred deal structure, accounting for approximately 77% of total deal value in FY26 — consistent with the long-term norm and a sharp reversal from FY25, when a single large hybrid transaction distorted the mix. Debt accounted for 23%, with no hybrid deals recorded during the year,

Commercial office emerged as the standout performer, with 14 transactions aggregating $1.6 billion at an average deal size of $116 million — up from $80 million across 12 transactions in FY25. Robust office absorption led by Global Capability Centres (GCCs) continued to underpin investor confidence in this segment. Notably, domestic investors made meaningful inroads into commercial real estate, a segment historically dominated by international capital.

Retail sector staged a notable comeback after being virtually absent in FY24 and FY25, contributing 9% of deal value in FY26. Blackstone’s acquisition of Kolkata’s South City Mall for $377 million — the single largest equity deal of the year — anchored activity in this segment, signalling renewed institutional appetite for quality retail assets backed by India’s strong consumption growth.

Residential sector saw 26 institutional transactions, broadly in line with prior years, with average deal size remaining stable at $25 million. Strong banking sector support — evidenced by high-teen growth in outstanding credit — continues to provide developers with a more cost-effective funding alternative to private equity. Nevertheless, institutional platforms remained active, particularly for established and credible developers.

Industrial and logistics, after commanding 47% of deal activity in FY25, moderated to 10% in FY26, though underlying investor interest remains firm, driven by e-commerce-led demand and the rapid evolution of warehouses into tech-enabled fulfilment hubs.

Aashiesh Agarwaal, SVP - Investment Advisory, Anarock Capital, said, “One of the most consequential trends is the accelerating rise of domestic capital. Foreign investors’ share of total deal value fell from 82% in FY22 to 52% in FY26, while domestic investors’ share rose from 15% to 38% over the same period — with domestic capital in absolute terms reaching USD 1,642 million, the highest in at least seven years. Rising domestic prosperity, improved market transparency, and growing local conviction in real estate as an asset class are driving this shift.”

Platform investing remained a defining feature of FY26, with HDFC Capital participating in half of all platform transactions — backing Eldeco ($174 million), Hero Realty ($112 million), and Curated Living Solutions for rental housing ($109 million). The year also saw the emergence of differentiated platforms in rental housing and luxury second homes, highlighting the evolution of investor strategies beyond traditional residential and commercial plays.

A few developers offered apartments with prior lease commitment for investment in India. Is it advisable and safe to invest in such properties? Kannan Venkatachalam, Sharjah.

There is a surge in demand for rental housing in select growth corridors where housing shortage is leading to high attrition levels. In certain instances, the corporates have entered into agreement with leading developers. It is better to scrutinise the leasing commitment entered and committed by the developers with the corporates and then invest in such units.

Are there restricted areas for NRIs while investing in India? Prakash Rangarai, Dubai.

Yes. Barring agricultural land, farmhouses, and plantation properties, NRIs are eligible to purchase any type of immovable property in India. To buy agricultural land or similar assets, prior approval from the Reserve Bank is required. There are no restrictions on the number of residential or commercial properties an NRI can own in India.