India’s Real Estate Investment Trust (REIT) market has rapidly scaled up over the past six years, emerging as a mainstream asset class with a gross asset value (GAV) of about Rs 2.3 lakh crore and overtaking
Hong Kong in terms of market size, according to a new report by ANAROCK Capital.
As per the report ‘India REITs — Taking a Stride’, India’s listed REITs had a combined equity market capitalisation of around Rs 1.66 lakh crore as of September 30, 2025. This milestone has been achieved even though only about 32 per cent of the country’s REIT-eligible real estate stock has been listed so far, underscoring the scale of untapped potential in the segment.
The listing of Knowledge Realty Trust in August 2025 has taken the number of listed REITs in India to five. Together, these trusts now control nearly 176 million square feet of Grade-A office and retail assets, along with a hospitality portfolio of more than 2,000 keys.
The listed REITs in India are Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust, Nexus Select Trust, and Knowledge Realty Trust.
From niche to mainstream
Since the first REIT listing in 2019, the sector has expanded steadily, with platforms such as Embassy, Mindspace, Brookfield India, Nexus and Knowledge Realty Trust building diversified portfolios across major office markets including Bengaluru, NCR, Mumbai Metropolitan Region, Hyderabad, Pune and Chennai, as well as select tier-II cities.
Vishal Singh, managing direct (investment banking) at ANAROCK Capital, said the growth reflects both asset quality and structural advantages for investors. “Since the first listing in 2019, the sector has expanded rapidly with Embassy, Mindspace, Brookfield India, Nexus, and now Knowledge Realty Trust — India’s largest office REIT by GAV and NOI. These platforms span Bengaluru, NCR, MMR, Hyderabad, Pune, Chennai, and key tier-II hubs, offering investors diversified exposure to India’s technology, BFSI, consulting, and retail corridors,” he said.
Singh also highlighted the tax efficiency of REIT payouts. “Alongside, REIT distributions are tax efficient through a mix of dividend, interest and return of capital, with current distributions offering upwards of 65% tax-exempt income in the hands of unitholders,” he added.
Under existing regulations, REITs are required to distribute at least 90 per cent of their net distributable cash flows, a feature that has positioned them as yield-oriented instruments and opened up access to institutional-grade commercial real estate for both high-net-worth individuals and retail investors.
Income plus growth
According to ANAROCK Capital, Indian REITs have delivered a resilient total-return profile despite interest rate hikes and market volatility.
“The Q2 FY26 scorecard underscores a powerful total-return proposition that has proven remarkably resilient to rate hikes and market volatility,” said Shobhit Agarwal, CEO of ANAROCK Capital. “Since listing, unit prices for the initial four REITs have surged between 25% and 61%, while the newly listed Knowledge REIT has already gained approximately 12%.”
This price appreciation has been supported by stable income streams. Trailing 12-month distribution yields have remained in the range of 5.1-6.0 per cent. In the second quarter of FY26 alone, the five listed REITs distributed more than Rs 2,331 crore, marking around 70 per cent year-on-year growth, driven by higher occupancies, asset additions and the inclusion of Knowledge Realty Trust.
On a comparative basis, Indian REIT indices have delivered a five-year annualised price return of about 8.9 per cent, outperforming REIT markets in Singapore, Japan and Hong Kong, many of which have posted weak or negative returns over the same period.
Strong fundamentals
Operational metrics also remain robust. Portfolio occupancies are running between 90 and 96 per cent, and REITs accounted for over 20 per cent of total pan-India gross office leasing in Q2 FY26. Embassy and Knowledge together leased around 2.5 million square feet during the quarter.
The sector is also benefiting from healthy leasing spreads of 20-36 per cent and a mark-to-market rental upside estimated at 15-24 per cent, providing visibility on net operating income growth over the next three to four years.
Balance sheets remain conservative, with all five REITs carrying AAA credit ratings from CRISIL, loan-to-value ratios in the range of 18-31 per cent and average borrowing costs of about 7.4-7.5 per cent. Interest coverage ratios range between 2.2x and 4.0x, while only around 38 per cent of total debt is due for maturity over the next four years.
ESG credentials and regulatory tailwind
Indian REITs have also positioned themselves as global leaders on sustainability. All five listed entities hold GRESB 5-star ratings, with scores in the low-to-mid 90s. Renewable energy accounts for 38-74 per cent of portfolio power consumption, and net-zero targets range from 2030 to the early 2040s.
A key catalyst for the next phase of growth is a recent regulatory change by Securities and Exchange Board of India. In November 2025, Sebi reclassified REIT units as equity-related instruments, effective January 1, 2026. This move is expected to enable index inclusion from mid-2026, allow higher allocation limits for mutual funds and shift REIT exposure firmly into equity portfolios.
“With Sebi’s pivotal reclassification taking effect in January, these trusts are poised to graduate from high-yield alternatives to essential equity portfolio staples,” Singh said. “Fuelled by impending index inclusion and deepening domestic participation, the sector is on track to breach a $20 billion market cap in the near term.”
