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The Securities and Exchange Board of India (SEBI) has approved a major regulatory shift by classifying Real Estate Investment Trusts (REITs) as equity for mutual fund and specialized investment fund portfolios. The decision is expected to deepen market participation, improve liquidity, and align India’s REIT framework with global standards.
Until now, REITs and Infrastructure Investment Trusts (InvITs) were clubbed under the hybrid category, reflecting their blend of debt and equity features. SEBI’s board has now retained the hybrid status for InvITs but moved REITs into the equity bracket, citing their liquidity, market behavior, and alignment with international norms.
“This will promote ease of doing business by enabling InvITs/REITs to attract capital from more investors under the Strategic Investor category,” SEBI said in its statement. The regulator also approved amendments to the Mutual Funds Regulations, 1996, to reflect the new classification.
The Indian REITs Association (IRA) welcomed the move, calling it a “milestone” for the sector. “This decision strengthens the REIT ecosystem and aligns with global best practices where REITs are part of equity indices,” IRA said. The association added that the reform would enhance market depth and accelerate growth of REIT instruments in India.
Amit Shetty, CEO of Embassy REIT, called the reclassification a “catalyst” for expanding investor access and improving liquidity. “It enables future index inclusion and strengthens REITs as a mainstream asset class,” he said.
The move follows SEBI’s earlier reform in July 2021, which reduced lot sizes for REITs to encourage retail participation. Together, these steps are positioning India as a progressive destination for institutional investment in yield-generating assets.
According to a joint report by CREDAI and Anarock released at CREDAI Natcon 2025 in Singapore, India’s REIT market has grown steadily since its debut in 2019, reaching a market capitalization of $18 billion as of August 2025. With three more REITs expected to launch in the coming years, the sector is projected to cross $25 billion by 2030.
