India’s Rs 2.3 lakh cr REIT market emerges as global powerhouse, overtakes Hong Kong

In just six years, India’s Real Estate Investment Trust (REIT) market has evolved from a regulatory experiment into a mainstream investment avenue, emerging as one of the most compelling REIT platforms globally.

According to the report “India REITs – Taking a Stride” by ANAROCK Capital, India’s REIT ecosystem today commands a gross asset value (GAV) of nearly Rs 2.3 lakh crore, with a combined equity market capitalisation of about Rs 1.66 lakh crore as of September 30, 2025 — a scale that now surpasses the Hong Kong REIT market.

What makes this milestone even more striking is that only around 32% of India’s REIT-worthy commercial real estate stock has been listed so far, highlighting the vast headroom for future growth.


The sector received a major boost with the listing of Knowledge Realty Trust in August 2025. With this addition, five listed REITs now collectively own and operate nearly 176 million square feet of Grade-A office and retail assets, along with a hospitality platform comprising over 2,000 keys across major Indian cities.

Vishal Singh, Managing Director – Investment Banking, ANAROCK Capital, notes that since India’s first REIT listing in 2019, the market has expanded rapidly through platforms such as Embassy, Mindspace, Brookfield India, Nexus, and now Knowledge Realty Trust — the country’s largest office REIT by both GAV and net operating income.

“These REITs offer investors diversified exposure to India’s core economic corridors spanning Bengaluru, NCR, Mumbai Metropolitan Region, Hyderabad, Pune, Chennai, and select Tier-II cities. Importantly, distributions are structured in a tax-efficient manner through a combination of dividend, interest, and return of capital, with more than 65% of current payouts being tax-exempt in the hands of unitholders,” he says.

The mandatory requirement to distribute at least 90% of net distributable cash flows has helped REITs establish themselves as efficient yield instruments, allowing both retail investors and HNIs to access institutional-grade commercial real estate without the challenges of illiquidity or opacity associated with direct property ownership.

Dual Engine of Income and Growth

India’s REIT story is no longer just about yield. According to Shobhit Agarwal, CEO – ANAROCK Capital, the Q2 FY26 performance underscores a robust total-return proposition.

“Since listing, unit prices of the first four REITs have appreciated between 25% and 61%, while Knowledge Realty Trust has already delivered gains of about 12% in a short span,” he says.

This price appreciation is supported by steady cash flows. Trailing 12-month distribution yields have remained stable in the 5.1–6.0% range, even amid interest rate volatility. In Q2 FY26 alone, the five REITs distributed over Rs 2,331 crore to investors — a sharp 70% year-on-year increase driven by higher occupancies, new asset additions, and the inclusion of Knowledge REIT.

On a longer-term basis, Indian REIT indices have delivered a five-year annualised price return of nearly 8.9%, significantly outperforming REIT markets in Singapore, Japan, and Hong Kong, many of which have struggled with negative or low single-digit returns over the same period.

Strong Occupancies and Blue-Chip Tenants

Operational metrics remain equally encouraging. Committed occupancies across Indian REIT portfolios stand between 90% and 96%, supported by healthy re-leasing spreads ranging from 20% to 36%.

In Q2 FY26, the REIT sector accounted for more than 20% of total pan-India gross office leasing, with Embassy and Knowledge Realty Trust alone leasing close to 2.5 million square feet.

This leasing momentum reflects sustained demand from blue-chip tenants across technology, BFSI, consulting, and retail sectors, reinforcing the stability of underlying cash flows.

ESG Leadership Comes to the Fore

Indian REITs are also emerging as global sustainability leaders. All five listed trusts have achieved GRESB 5-Star ratings, placing them in the global top decile with scores in the low-to-mid 90s.

Renewable energy already powers between 38% and 74% of portfolio consumption, while net-zero targets range from as early as 2030 for Nexus to the early 2040s for others.

SEBI Reclassification to Unlock Next Growth Phase

A pivotal regulatory change is set to redefine the sector’s trajectory. In November 2025, SEBI reclassified REIT units as equity-related instruments, effective January 1, 2026.

This move shifts REIT exposure from debt or hybrid categories into mainstream equity allocations, paving the way for index inclusion from mid-2026 and enabling higher mutual fund participation.

According to Vishal Singh, this change could significantly broaden the domestic investor base. “With SEBI’s reclassification taking effect in January, Indian REITs are poised to evolve from high-yield alternatives into core equity portfolio holdings. Supported by index inclusion and rising domestic participation, the sector is well positioned to cross a USD 20 billion market capitalisation in the near term,” he says.

As 2026 approaches, India’s REIT market appears to be entering a new phase — one that blends stable income, long-term capital appreciation, and strong ESG credentials. More than just a real estate revival, the rise of REITs signals the emergence of a structural growth engine that could play a defining role in India’s capital markets over the next decade.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)