India's real estate sector achieved exceptional performance in Q2 2026, recording $2.3 billion in deal activity, representing an 83% year-on-year increase and nearly tripling sequentially from the previous quarter's $793 million. According to Grant Thornton Bharat's latest report, deal volumes surged 129% from 17 transactions in Q2 2025 to 39 deals in Q2 2026, with a 18% sequential increase demonstrating renewed confidence in the sector despite prevailing macroeconomic uncertainties. This performance significantly outpaced institutional investment activity, which reached $1.9 billion with a 16% quarter-on-quarter increase during the same period.
Commercial assets continued to dominate investment activity, accounting for 65% of total deal value with 12 deals worth $997 million. As per Grant Thornton Bharat, the majority of transactions involved investments in commercial assets by REITs and PE funds, underscoring investor preference for commercial and annuity-generating assets. The office sector maintained its leadership position, attracting nearly $1 billion and accounting for 51% of total investments in the institutional investment landscape. Data centres emerged as the second-largest recipient of institutional capital, accounting for 40% of total investments, reflecting increasing investor interest in digital infrastructure assets.
M&A transactions dominated the deal activity, accounting for 56% of total volumes and reaching a record high of 22 deals in Q2 2026. Private equity investments contributed 34% of volumes, with PE deal values more than doubling quarter-on-quarter. The largest transaction was the $323 million PE investment by Mindspace Business Parks REIT and 360 ONE Alternates Asset Management in Radial IT Park Ltd. Public markets witnessed a sharp increase with two IPOs and two QIPs raising $782 million, led by Bagmane Prime Office REIT's $355 million IPO. Domestic transactions accounted for nearly 95% of total M&A activity, while inbound activity remained subdued for the fifth consecutive quarter.
Domestic institutions maintained their dominant position in investment activity, accounting for 54% of total investments in Q2 2026, compared with 46% by foreign investors. For H1 2026, investments by domestic institutions stood at $2.2 billion, accounting for 64% of total investment activity, compared to a 43% share during H1 2025. Foreign investments totalled $1.3 billion, representing the remaining 36%, down from 57% in the corresponding period last year. The sector's resilience was further demonstrated by real estate operators recording 13 deals worth $299 million, with M&A contributing 92% of deal volumes, reflecting continued consolidation in the segment.
India's residential market demonstrated strong growth in H1 2026, with 1.38 lakh residential units sold representing a 3% year-on-year increase. According to JLL's latest report, Bengaluru led the growth with a 16% annual increase in residential unit sales and 41% annual growth in new launches. Chennai recorded the strongest performance with 27% year-on-year growth in sales, while Delhi's residential market saw 7% growth with new launches gaining momentum. Notably, 1.68 lakh new units were made available to buyers in H1 2026, with Bengaluru leading cities with 41% annual increase in new launches. Premium housing demand dominated the market, with 71% of sales in the above-₹1 crore segment, while the ₹1.5 crore to ₹3 crore segment saw impressive 58% year-on-year growth.
