REITs in India delivered around 16% annualised returns since 2019; 5 things to check before investing

Can you earn rental income from commercial properties without buying an office space or managing tenants? Real estate investment trusts (REITs) make this possible by allowing investors to own units in income-generating properties.

India now has six listed REITs, and the market has grown significantly since the first listing in 2019. But how do REITs generate returns, what is driving their growth, and what should investors check before investing?

These were some of the key questions discussed by Ramesh Nair, MD and CEO of Mindspace Business Parks REIT, during a panel discussion with Naveen Kumar, Editor, ET Wealth, at the ET Wealth Expo held in Mumbai on October 30–31, 2026.


Here are the key takeaways from the discussion.

What are REITs and how can retail investors invest in commercial real estate?

Explaining REITs, Nair said retail investors can now buy even one REIT unit, making the investment avenue accessible to a much wider group. Earlier, rules required a minimum investment of ₹10 lakh.

REITs earn revenue primarily through rentals paid by tenants and property management charges, also known as common area maintenance (CAM) charges.

From this revenue, they meet expenses such as building maintenance, security, electrical and mechanical services, housekeeping, property taxes and insurance. Interest costs and taxes are also accounted for before arriving at the amount available for distribution.

Under the applicable rules, REITs are required to distribute 90% of the relevant distributable amount to unit holders.

This allows investors to participate in rental income generated by commercial properties without having to buy or manage the properties themselves. They can also benefit if the market price of REIT units appreciates.

Don't look at distribution yield alone; consider total returns

Nair emphasised that investors should evaluate REITs based on their total returns rather than focusing only on the income distributed to unit holders.

He cited a distribution yield of around 5–7% and said India's listed REITs had delivered approximately 16% annualised total returns since the first REIT was listed in 2019.

The historical total return figure includes both distributions and appreciation in unit prices; the two should not be treated as separate additional returns. Past performance, however, does not guarantee future returns.

REITs should not be evaluated like conventional equity investments. Their underlying assets are physical commercial properties, and their income is linked to rentals, occupancy levels, and tenant demand.

At the same time, REIT units are listed and traded on stock exchanges. Their market prices can fluctuate, so investors should be prepared for price volatility.

How are global capability centres (GCCs) driving India's office REIT market?

The growth of global capability centres has emerged as a major driver of India's office space demand.

Nair said average annual office absorption in India, which was around 30 million sq. ft. during the decade before Covid, has increased to nearly 45 million sq. ft. after the pandemic.

He attributed this growth partly to companies recognising India's cost advantage in terms of real estate and talent. The expert said GCCs currently contribute around 40-45% of the country's total office demand.

India has approximately 2,100 companies operating GCCs, with around 3,700 centres across the country. According to Nasscom estimates cited by Nair, this is already a $100 billion revenue industry.

The nature of work undertaken by these centres has also changed significantly. Earlier, multinational companies primarily used India for cost-effective back-office operations.

Today, GCCs undertake work similar to that of their global headquarters, including product development, advanced engineering and AI research.

The increase in office demand has also supported occupancy levels. Nair said occupancy had risen from around 86–87% two to three years ago to nearly 96% currently.

How much growth potential does India's REIT market have?

India now has six listed REITs, comprising five office REITs and one retail REIT. However, the market has considerable room to expand, according to Nair.

Retail investor participation has increased significantly since the first REIT listing in 2019. While around 5,000 - 6,000 retail investors participated initially, the number has grown to approximately 5 lakh.

Institutional participation has also increased.

According to Nair, foreign portfolio investors have invested around ₹25,000 crore in REITs, while mutual funds have invested another ₹25,000 crore. Insurance companies have invested close to ₹10,000 crore, and pension fund participation has also started, with investments touching around ₹1,000 crore.

Nair compared India's REIT market with developed markets such as the US, UK and Australia, where listed REITs account for a much larger share of the real estate investment universe.

The broader opportunity for growth, however, does not automatically translate into higher investor returns. The quality of properties acquired, their purchase valuations, rental potential and financing costs will remain important considerations.

What should investors check before investing in REITs?

Nair identified four to five important parameters investors should examine before investing in a REIT. These include:

• Net operating income (NOI): Check how the REIT's NOI has grown over time.
• Distribution growth: Track how distributions to unit holders have increased.
• Occupancy levels: Examine how occupancy has changed and whether the REIT has been able to fill vacant spaces.
• Sponsor and management team: Assess the sponsor and the quality of the management team.
• Future asset additions: Look at the sponsor's ability to bring additional assets into the REIT.

These factors can help investors assess the performance of the underlying properties as well as the REIT's ability to sustain and grow its income.

How are regulatory changes supporting India's REIT sector?

Nair highlighted two regulatory developments that have helped the REIT market.

The first was the government's decision to allow floor-wise demarcation of special economic zone (SEZ) office space.

He explained that around 50% of India's office demand used to come from SEZs. However, after the tax benefits available to these zones stopped, their share of demand declined significantly, falling to around 5% after 2020. This left developers with substantial vacant office space.

The government subsequently allowed vacant SEZ floors to be converted into non-SEZ space. Nair said his organisation converted around 26 lakh sq. ft. of vacant space and leased 22 lakh sq. ft. of it to non-SEZ clients.

The second development concerns the classification of REIT investments as equity investments for mutual funds under the applicable framework.

According to Nair, this change could encourage greater mutual fund participation, improve liquidity and support better price discovery. Dedicated REIT-focused mutual fund products could also make the asset class more accessible to retail investors.

Which new property segments could emerge as REIT opportunities in India?

Office properties have been the core of India's REIT market so far. However, Nair expects other property segments to gain importance as the market expands.

He identified industrial and logistics properties, including warehousing, as potential areas for the next phase of REIT growth. Data centres could also emerge as another asset class.

He further highlighted opportunities in hotels and rental housing. Some existing REITs already have exposure to hotels and data centres, while India does not yet have a REIT focused on rental housing.

Nair also pointed to the US market, where senior living and elder-care facilities have emerged as significant REIT asset classes.

According to him, more property segments could eventually become part of India's REIT market as the sector expands beyond traditional office assets.