India’s Real Estate Investment Trust (REIT) market has quietly crossed a significant milestone. What began as a cautious policy experiment just six years ago has now evolved into a mainstream investment asset, commanding scale, liquidity, and growing investor confidence.
As of September 30, 2025, India’s listed REITs together hold a gross asset value (GAV) of nearly Rs. 2.3 lakh crore, according to the report India REITs – Taking a Stride by ANAROCK Capital. Equity market capitalisation has reached about Rs 1.66 lakh crore, already surpassing the size of the Hong Kong REIT market, despite only around 32% of India’s REIT-ready assets having been listed so far.
The momentum picked up further in August 2025 with the listing of Knowledge Realty Trust, taking the total number of listed REITs to five. Together, these trusts control approximately 176 million square feet of Grade-A office and retail real estate, along with a hospitality platform of over 2,000 keys.
From niche investment to core portfolio holding
Since India’s first REIT listing in 2019, the sector has expanded steadily through platforms such as Embassy, Mindspace, Brookfield India, Nexus, and now Knowledge Realty Trust. According to Vishal Singh, Managing Director – Investment Banking at ANAROCK Capital, Knowledge Realty Trust has emerged as India’s largest office REIT by both GAV and net operating income.
“These REITs offer diversified exposure across Bengaluru, NCR, Mumbai Metropolitan Region, Hyderabad, Pune, Chennai, and key tier-II cities,” Singh says. “They give investors access to India’s technology, BFSI, consulting, and organised retail corridors through professionally managed assets.”
A major attraction has been predictable and tax-efficient income. REIT distributions are structured through a combination of dividends, interest, and return of capital, with more than 65% of current payouts being tax-exempt in the hands of unitholders. Regulations mandating the distribution of at least 90% of net distributable cash flows have reinforced the role of REITs as reliable yield instruments.
For high-net-worth individuals and retail investors alike, REITs have opened a door to commercial real estate without the challenges of direct ownership such as large ticket sizes, illiquidity, and lack of transparency.
Strong returns despite global volatility
The performance numbers underline why REITs are increasingly finding space in portfolios. “The Q2 FY26 results show a resilient total-return story,” says Shobhit Agarwal, CEO of ANAROCK Capital. Since listing, unit prices of the first four REITs have risen between 25% and 61%, while Knowledge Realty Trust has already gained around 12%.
Income returns have remained steady, with trailing twelve-month distribution yields ranging between 5.1% and 6.0%. In Q2 FY26 alone, the five REITs distributed more than Rs 2,331 crore to investors, marking nearly 70% year-on-year growth. This surge was driven by higher occupancies, new asset additions, and the inclusion of Knowledge Realty Trust.
Over a five-year period, Indian REIT indices have delivered an annualised price return of about 8.9%, outperforming REIT markets in Singapore, Japan, and Hong Kong, many of which have seen muted or negative returns.
High occupancy and blue-chip tenants
Operational fundamentals remain robust. Portfolio occupancies range between 90% and 96%, close to optimal levels. In Q2 FY26, REITs accounted for over 20% of total office leasing across India. Embassy and Knowledge alone leased nearly 2.5 million square feet during the quarter, reflecting strong demand from corporate tenants.
Re-leasing spreads remain healthy at 20–36%, while mark-to-market potential on in-place rents is estimated at 15–24%. This provides clear visibility for net operating income growth over the next three to four years.
Financial strength and ESG leadership
Balance sheets across the sector remain conservative. All five REITs hold AAA credit ratings from CRISIL, with loan-to-value ratios between 18% and 31%. Average borrowing costs are stable at around 7.4–7.5%, and interest coverage ratios range from 2.2x to 4.0x. Only about 38% of total debt matures over the next four years, reducing refinancing risk.
On sustainability, Indian REITs are emerging as global leaders. All five have achieved 5-Star GRESB ratings, with scores in the low-to-mid 90s. Renewable energy meets between 38% and 74% of portfolio consumption, and net-zero targets range from 2030 to the early 2040s.
Regulatory boost sets stage for next leap
A key catalyst lies ahead. In November 2025, SEBI reclassified REIT units as equity-related instruments, effective January 1, 2026. This move shifts REITs from debt or hybrid allocations into mainstream equity buckets, enables index inclusion from mid-2026, and allows higher mutual fund exposure.
“With the reclassification, REITs are set to move from being seen as yield alternatives to becoming core equity portfolio holdings,” Singh says. Industry estimates suggest the sector could cross a $20 billion market capitalisation in the near term.
As 2026 approaches, India’s REIT story is no longer just about real estate recovery. It reflects the rise of a stable, transparent, and scalable investment platform that blends income, growth, and sustainability, reshaping how investors participate in the country’s commercial property market.
