India's Real Estate Investment Trust (REIT) market has rapidly emerged as a global powerhouse, surpassing Hong Kong in size and performance within just six years of its inception. The Indian REIT ecosystem now boasts a gross asset value (GAV) of ₹2.3 lakh crore and a listed market capitalization of ₹1.66 lakh crore, exceeding that of Hong Kong, according to an ANAROCK Capital report.
This remarkable growth trajectory underscores the increasing institutionalization of the commercial real estate sector in India. The speed at which India's REIT market has expanded reflects both the strong quality of assets and the rising investor confidence in this asset class.
Currently, five listed REITs operate in the Indian market: Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India REIT, Nexus Select Trust, and Knowledge Realty Trust. These REITs collectively manage a portfolio of over 176 million square feet of Grade-A office and retail space across major Indian cities, along with a growing hospitality platform that includes over 2,000 hotel keys. These portfolios have maintained high occupancy levels, typically ranging from 90% to 96%, driven by consistent leasing demand from technology firms, global capability centers, and organized retail players.
Indian REITs have delivered competitive returns compared to their global peers. Over the past five years, REIT indices in India have generated annualized price returns of approximately 8.9%, outperforming REIT markets in Singapore, Japan, and Hong Kong. Since their respective listings, the unit prices of the initial four REITs have increased by 25% to 61%, while Knowledge Realty Trust has already gained around 12%.
Distributions to unitholders have also seen a sharp increase. In the second quarter of FY26, REITs collectively distributed over ₹2,300 crore, marking a year-on-year increase of around 70%. This surge was driven by higher occupancies, new asset additions, and the listing of Knowledge Realty Trust. Trailing 12-month distribution yields have remained stable between 5.1% and 6.0%, making REITs an attractive investment option for those seeking regular income. Moreover, a significant portion of REIT distributions, exceeding 65%, remains tax-exempt for investors due to the blend of dividends, interest, and return of capital.
A key factor expected to further boost the growth of the Indian REIT market is the Securities and Exchange Board of India's (SEBI) decision to classify REIT units as equity-related instruments starting January 1, 2026. This reclassification is anticipated to facilitate index inclusion and increase participation from mutual funds, thereby channeling more domestic capital into the sector. Experts predict that this move alone could potentially propel India's REIT market toward a ₹1.7 lakh crore market capitalization in the near term.
Despite this impressive growth, only about 32% of India's REIT-ready commercial real estate has been listed so far, indicating substantial potential for future expansion. With strong leasing demand, high occupancy rates, rising distributions, and a supportive regulatory environment, REITs are poised to become an even more prominent investment segment in India.
