In less than a decade, India’s Real Estate Investment Trust (REIT) market has transitioned from a regulatory experiment into a core pillar of the country’s capital markets. With a gross asset value (GAV) of approximately INR 2.3 lakh crore and equity market capitalisation of INR 1.66 lakh crore as of September 2025, India has now overtaken Hong Kong in REIT market scale — despite listing only about one-third of its investable commercial real estate stock. This rapid ascent underscores the emergence of Indian REITs as a globally competitive, yield-driven asset class.

With the recent listing of Knowledge Realty Trust in August 2025, five listed trusts now control ~176 million sq ft of Grade-A office and retail space alongside a 2,000 plus-key hospitality platform.

Vishal Singh, MD – Investment Banking, ANAROCK Capital, says, “Since the first listing in 2019, the sector has expanded rapidly with Embassy, Mindspace, Brookfield India, Nexus, and now Knowledge Realty Trust — India’s largest office REIT by GAV and NOI. These platforms span Bengaluru, NCR, MMR, Hyderabad, Pune, Chennai, and key tier-II hubs, offering investors diversified exposure to India’s technology, BFSI, consulting, and retail corridors. Alongside, REIT distributions are tax efficient through a mix of dividend, interest and return of capital, with current distributions offering upwards of 65% tax-exempt income in the hands of unitholders”

The mandatory distribution of at least 90% of net distributable cash flows has successfully transformed these trusts into efficient yield vehicles, democratizing access to Grade-A commercial real estate for HNIs and retail investors without the opacity or illiquidity of direct property ownership.

ROI: Dual-Engine of Income and Growth

“The Q2 FY26 scorecard underscores a powerful total-return proposition that has proven remarkably resilient to rate hikes and market volatility,” says Shobhit Agarwal, CEO – ANAROCK Capital. “Since listing, unit prices for the initial four REITs have surged between 25% and 61%, while the newly listed Knowledge REIT has already gained approximately 12%. This capital appreciation is complemented by steady income generation, with trailing 12-month distribution yields holding firm in an attractive 5.1–6.0% band. In the second quarter of FY26 alone, the five REITs distributed over INR 2,331 crore — a massive ~70% year-on-year growth driven by occupancy upticks, new asset additions and listing of Knowledge REIT.”

Crucially, Indian REITs index have delivered a five-year annualised price return of roughly +8.9%, significantly outperforming peers in Singapore, Japan, and Hong Kong, many of which have languished with negative or low-single-digit returns during the same period.

90% Plus Occupancy & Blue-Chip Stability

Portfolios are running near optimal capacity with committed occupancies ranging from 90–96%. The sector accounted for over 20% of all pan-India gross office leasing in Q2 FY26, with Embassy and Knowledge alone leasing ~2.5 million sq ft.

Robust Growth Outlook

* Re-leasing Spreads: Strong spreads of 20–36%.

* Mark-to-Market Upside: An estimated ~15–24% upside on in-place rents, securing visible Net Operating Income (NOI) growth for the next 3–4 years.

* Fortress Balance Sheets with AAA Ratings: The sector is underpinned by prudent financial management. All five REITs maintain AAA credit ratings from CRISIL and operate with conservative leverage (loan-to-value) of 18–31%.

* Low Debt Costs: Average debt cost stands at ~7.4–7.5%.

* Healthy Coverage: Interest-coverage ratios range between 2.2x and 4.0x.

* Long Maturity: With only ~38% of debt maturing over the next 4 years, bulk of the borrowings is backed by long term repayment tenures.

ESG: Global Top Decile Performance

Indian REITs have established themselves as global sustainability leaders. All five entities hold GRESB 5-Star ratings, with scores in the low-to-mid 90s.

* Renewable Energy: Currently powers 38–74% of portfolio consumption.

* Net-Zero: Commitments range from 2030 (Nexus) to the early 2040s.

Equity Reclassification a Game-Changer

A pivotal regulatory shift will unlock the next wave of capital. In November 2025, SEBI reclassified REIT units as ‘equity-related instruments effective January 1, 2026. This shifts REIT exposure from debt/hybrid sleeves to mainstream equity buckets, enables index inclusion starting mid-2026, and allows higher allocation limits for mutual funds, significantly broadening the domestic capital base.

As 2026 approaches, the Indian REIT landscape stands on the brink of a quantum leap.

“With SEBI’s pivotal reclassification taking effect in January, these trusts are poised to graduate from high-yield alternatives to essential equity portfolio staples,” says Vishal Singh. “Fuelled by impending index inclusion and deepening domestic participation, the sector is on track to breach a USD 20 billion market cap in the near term.”

This evolution marks more than just a real estate recovery — it signals the rise of a structural powerhouse that will define the next decade of India’s capital markets, offering investors a rare blend of stability, sustainability, and soaring growth.