Global institutional investors are preparing to deploy nearly USD 144 billion into commercial real estate in 2026, signalling a clear revival in investment sentiment after a prolonged period of caution.
According to Knight Frank’s latest Active Capital Survey, the renewed appetite is being driven by easing interest rates, improving occupier demand and long-term demographic trends, with India emerging as an increasingly important destination for global capital.
Global Capital Returns With Renewed Confidence
The survey, which captures the views of 119 of the world’s largest real estate investors managing over USD 1.4 trillion in assets, points to a decisive shift in sentiment. Around 87 per cent of investors, by assets under management, plan to increase their direct exposure to commercial real estate in 2026, while 62 per cent expect to be net buyers. This marks a strong rebound in acquisition appetite following years of elevated interest rates and market uncertainty.
However, the return of capital is not indiscriminate. Investors are approaching the market with greater discipline, favouring clarity on income, asset quality and long-term resilience. Core and Core-plus strategies are leading the recovery, with an estimated USD 37 billions of planned global investment targeting Core assets that offer stable cash flows and lower risk.
India Moves Into Focus for Global Investors
Against this backdrop, India is steadily moving up the priority list for global institutional investors. While markets such as the UK and Germany continue to top global destination rankings, India is transitioning from an emerging allocation to a strategic component of Asia-Pacific real estate portfolios.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said global capital is returning with a more measured approach. He noted that India is increasingly being viewed as a defensive growth market, supported by strong occupier demand, improving asset quality and long-term structural drivers. This, he said, aligns closely with the evolution of India’s commercial real estate market, particularly in Grade A office assets across cities such as Mumbai, Bengaluru, Delhi-NCR, Hyderabad, Pune and Chennai.
Offices Reclaim Centre Stage
Offices have re-emerged as the most sought-after asset class globally, with 69 per cent of investors planning allocations in 2026. This marks a significant turnaround for a sector that faced prolonged uncertainty following the pandemic and the rise of hybrid work models.
The renewed interest is closely linked to the return of occupiers. Investors are now highly selective, focusing on well-located, ESG-compliant office assets that meet modern workplace standards, while avoiding properties that face long-term obsolescence. In India, this trend is reflected in sustained leasing momentum, driven largely by Global Capability Centres, technology companies and domestic corporates. Together, these occupiers account for nearly 75 per cent of office demand, reinforcing confidence in high-quality office stock.
Living, Logistics and Retail Add Depth
Beyond offices, living sectors have emerged as the second most targeted asset class globally, with 65 per cent of investors planning allocations. These segments are attracting interest due to favourable demographics and their defensive income characteristics. While institutional living formats such as rental housing and student accommodation are still at an early stage in India, they represent a significant medium- to long-term opportunity given rapid urbanisation and a young population.
Industrial and logistics assets continue to attract strong investor conviction, with 63 per cent of global investors planning allocations. Supply chain reconfiguration, the growth of e-commerce and sustained infrastructure investment are underpinning this demand. These trends are particularly pronounced in India, where logistics and warehousing have evolved into a core institutional asset class.
Retail, too, has returned to investor focus. About 56 per cent of investors globally are planning allocations, reflecting stabilisation in the sector and renewed opportunities in dominant, experience-led shopping centres.
Partnerships Become Central to India Strategy
One of the clearest shifts highlighted by the survey is the growing preference for collaboration. Around 68 per cent of investors, representing USD 94 billion of planned investment, are open to joint ventures or capital partnerships in 2026.
This approach is especially relevant in India, where local expertise, platform scale and execution capability play a critical role in investment outcomes. Structured partnerships and programmatic platforms are increasingly seen as effective ways for global investors to manage complexity, mitigate risk and scale exposure in the market.
Harry Chaplin-Rogers, Director, International Capital, Knight Frank India, said India is now being viewed as a core, long-term market. He added that resilient occupier demand, a rapidly improving stock of institutional-grade assets and scalable partnership structures are helping global investors navigate complexity while achieving sustained growth.
Operational Real Estate Gains Momentum
Operational real estate sectors are also gaining traction globally as investors look to align with long-term structural trends. Data centres, infrastructure and healthcare are emerging as key areas of interest, driven by digital adoption, demographic shifts and public investment.
In India, rising data consumption, expanding healthcare needs and sustained infrastructure spending are translating into growing investor interest across these segments. These assets often require specialised expertise, further reinforcing the role of partnerships and joint ventures in market entry and scale-up.
A Selective but Competitive Market Ahead
Nick Braybrook, Global Head of Capital Markets at Knight Frank, described the findings as clear evidence of a turnaround in global real estate investment. He noted that the return of occupiers has finally drawn investors back into the office sector, with Core capital playing a crucial role in resetting pricing benchmarks. While capital remains selective, it is increasingly concentrated in markets where confidence in values, liquidity and exit prospects is strongest.
Victoria Ormond, Head of Capital Markets Insight at Knight Frank, added that interest rates remain the single most influential factor shaping investment decisions, followed by occupier demand and bond yields. As investors look ahead, many are balancing early-cycle opportunities with longer-term themes, using partnerships to manage risk, access scale and navigate an uncertain global environment.
Together, these trends suggest that while the next phase of real estate investment will be more measured, it is also likely to be more resilient, with India firmly positioned as a long-term beneficiary of global capital flows.
