What is the story about?
India's Real Estate Investment Trust (REIT) market is gaining fresh visibility, supported by its fifth listing in 2025 and a series of transformative regulatory reforms. The conversation has now shifted from whether REITs will scale in India to how quickly the market can grow from here.
REITs work much like mutual funds, except the underlying assets are income-generating real estate such as offices, malls, and warehouses. India's REIT journey, which began in 2014, has reached an important milestone. The country has five listed REITs: Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India REIT, Nexus Select Trust REIT, and Knowledge Trust REIT. Together, they hold a market capitalisation of around $18 billion.
It’s a meaningful step for the domestic market, but still small compared with global peers. The United States, which introduced REITs in 1960, has 196 listed trusts with a market cap of $1.4 trillion. Other mature REIT markets include Japan with 57, Singapore with 39, and Australia with 32.
A key catalyst for future growth—reforms that take effect from January 2026—will reclassify REITs as equities, bringing India’s framework closer to global standards. This change has the potential to unlock substantial institutional investment.
Currently, mutual funds have invested only around ₹23,000 crore in REITs, less than 1% of their net asset value (NAV), even though they are allowed to allocate up to 10%. The new reclassification is expected to push equity funds to allocate more, improve liquidity, and help REITs move closer to becoming a mainstream asset class.
Also Read: Rare earths and the new power play: How supply chains reshaped global geopolitics in 2025
This follows an earlier reform in 2024 that reduced the holding period for capital gains from 36 months to 12 months, providing an initial push. The asset class also benefits from tax incentives, where dividends and rental income are exempt for investors, provided the underlying special purpose vehicles (SPVs) pay corporate tax.
According to data from Anarock, Indian REITs have demonstrated strong performance, delivering distribution yields of 6-7%, which is comfortably above the global benchmark of 4-5%. Capital appreciation has stood at 3-5%, also outperforming international peers. However, the sector faces the challenge of elevated vacancy levels, which remain in the 10-16% range.
Despite this, on-the-ground activity remains robust. As of October 2025, over 23 million square feet of new Grade A office space was under construction. Demand is significantly driven by Global Capability Centres (GCCs), which accounted for 28-29% of gross leasing, reinforcing India’s status as a global office hub. Looking ahead, the market is projected to surpass $30 billion in the coming years.
Also Read: India’s Goldilocks economy faces softer glow in 2026: Growth, inflation and capital flows in focus
Further momentum is expected from the introduction of Small and Medium REITs (SM REITs), which allow fractional ownership of properties valued between ₹50 crore and ₹500 crore. CBRE estimates that this nascent segment alone could grow to over $75 billion, encompassing nearly 500 million square feet of eligible commercial assets across offices, retail, and logistics.
Catch all the latest updates from the stock market here
REITs work much like mutual funds, except the underlying assets are income-generating real estate such as offices, malls, and warehouses. India's REIT journey, which began in 2014, has reached an important milestone. The country has five listed REITs: Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India REIT, Nexus Select Trust REIT, and Knowledge Trust REIT. Together, they hold a market capitalisation of around $18 billion.
It’s a meaningful step for the domestic market, but still small compared with global peers. The United States, which introduced REITs in 1960, has 196 listed trusts with a market cap of $1.4 trillion. Other mature REIT markets include Japan with 57, Singapore with 39, and Australia with 32.
A key catalyst for future growth—reforms that take effect from January 2026—will reclassify REITs as equities, bringing India’s framework closer to global standards. This change has the potential to unlock substantial institutional investment.
Currently, mutual funds have invested only around ₹23,000 crore in REITs, less than 1% of their net asset value (NAV), even though they are allowed to allocate up to 10%. The new reclassification is expected to push equity funds to allocate more, improve liquidity, and help REITs move closer to becoming a mainstream asset class.
Also Read: Rare earths and the new power play: How supply chains reshaped global geopolitics in 2025
This follows an earlier reform in 2024 that reduced the holding period for capital gains from 36 months to 12 months, providing an initial push. The asset class also benefits from tax incentives, where dividends and rental income are exempt for investors, provided the underlying special purpose vehicles (SPVs) pay corporate tax.
According to data from Anarock, Indian REITs have demonstrated strong performance, delivering distribution yields of 6-7%, which is comfortably above the global benchmark of 4-5%. Capital appreciation has stood at 3-5%, also outperforming international peers. However, the sector faces the challenge of elevated vacancy levels, which remain in the 10-16% range.
Despite this, on-the-ground activity remains robust. As of October 2025, over 23 million square feet of new Grade A office space was under construction. Demand is significantly driven by Global Capability Centres (GCCs), which accounted for 28-29% of gross leasing, reinforcing India’s status as a global office hub. Looking ahead, the market is projected to surpass $30 billion in the coming years.
Also Read: India’s Goldilocks economy faces softer glow in 2026: Growth, inflation and capital flows in focus
Further momentum is expected from the introduction of Small and Medium REITs (SM REITs), which allow fractional ownership of properties valued between ₹50 crore and ₹500 crore. CBRE estimates that this nascent segment alone could grow to over $75 billion, encompassing nearly 500 million square feet of eligible commercial assets across offices, retail, and logistics.
Catch all the latest updates from the stock market here
