Industry experts believe this transition could fundamentally reshape the sector over the next three to five years by improving transparency, strengthening governance standards, and accelerating the institutionalisation of real estate as a mainstream asset class.
According to Cushman & Wakefield’s Q1 2026 Capital MarketBeat report, institutional investments in Indian real estate stood at $1.6 billion during the quarter, registering a 26% year-on-year increase.
Domestic investors accounted for nearly 76% of the inflows at $1.2 billion, while foreign investments contributed the remaining 24%.
Significantly, domestic capital has now surpassed foreign inflows in four of the last five quarters, highlighting a sustained shift in investment dynamics.
Domestic Capital Creating a More Stable Investment Ecosystem
Commenting on the changing landscape, Pratik Tibrewala- Senior-Vice President & Head Corporate Finance – M3M India said that the Indian real estate sector has evolved significantly from a market once heavily dependent on developer balance sheets and selective foreign investments.
According to Tibrewala, the sector today is supported by a far more diversified capital ecosystem that includes REITs, InvITs, AIFs, private credit, bonds, and public markets. He noted that domestic investors have become increasingly active across office, retail, warehousing, and other yield-oriented real estate segments.He attributed this shift to strong domestic liquidity, rising financial savings, and growing participation from family offices, domestic AIFs, REITs, and private wealth platforms. Tibrewala also highlighted the rising role of private credit in supporting mergers and acquisitions, growth capital, and project financing.
“India has entered the early stages of real estate financialization, which will improve transparency, governance, balance-sheet discipline, and long-term market stability,” he said, adding that domestic capital will play an increasingly strategic role in funding India’s urbanisation and infrastructure growth story.
Real Estate Increasingly Seen as a Strategic Asset Class
According to Raunaq Arora & Maanu Dewan, Founders Ace Consulting – Real Estate Consultancy Firm based out of Gurugram, domestic investors are no longer viewing real estate as a short-term or tactical bet, but rather as a strategic portfolio allocation focused on long-term wealth creation.
The founders noted that domestic institutional investments in Indian real estate rose 53% during the first half of 2025, while domestic capital accounted for nearly 57% of total institutional inflows during the year. They believe this trend could lead to greater capital stability, reduced dependence on global market cycles, and faster growth of organised investment platforms such as REITs and AIFs.
They further pointed out that India has nearly $41 billion of untapped domestic institutional capital, indicating a significant runway for long-term growth. As more domestic money enters the sector, they expect real estate to increasingly resemble other mainstream financial asset classes with better transparency, liquidity, and governance standards.
Branded Developers and Emerging Corridors to Gain
Echoing similar views, Pushpender Singh, Managing Director, JMS Group said domestic investors today are approaching real estate with a far more strategic and long-term mindset compared to earlier sentiment-driven investments.
According to Singh, this shift is expected to bring greater stability and maturity to the industry while encouraging developers to focus more on transparency, timely execution, quality development, and customer trust. He added that infrastructure-led locations and emerging urban corridors are likely to attract stronger investor interest as buyers increasingly prioritise long-term value creation.
Meanwhile, Manik Malik, CEO and President, BPTP said the growing role of domestic capital reflects a broader structural shift in the Indian real estate market, where investors are increasingly evaluating projects on parameters such as governance, execution capability, balance-sheet discipline, and long-term value creation.
Malik believes the trend in the next 3-5 years will accelerate consolidation in favour of organised and branded developers with strong execution track records and strategically located land banks. He also expects integrated communities, lifestyle-led developments, and future-ready urban ecosystems to continue attracting strong investor interest over the coming years.
A Defining Shift for the Next Phase of Growth
Industry experts believe the growing dominance of domestic capital could become one of the defining themes for Indian real estate over the next decade. As institutional participation deepens and investment flows become more stable, the sector is expected to become more organised, resilient, and aligned with India’s long-term urban growth story.