India's Real Estate Investment Trust (REIT) market has gone a long way to achieve a major milestone as its gross asset value (GAV) has exceeded 2.3 lakh crore, thereby making it bigger than Hong Kong in terms of market size. As per the report by ANAROCK, the equity market capitalisation of Indias listed REITs is at around 1.66 lakh crore which is indicative of the sector becoming more and more vital to the two interlinked economic systems, financial and real estate, of the country.
The achievement is particularly notable given the sector’s relatively short history. India introduced REITs only in 2019, yet within six years, the platform has evolved into one of Asia’s most dynamic listed real estate markets. Industry experts note that this growth has occurred even as only about one-third of India’s REIT-ready commercial real estate stock has been monetised, pointing to a long runway for expansion.
Rapid expansion across office and retail assets
Since the first REIT listing, the sector has expanded through multiple high-quality platforms, including Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India REIT, Nexus Select Trust, and the recently listed Knowledge Realty Trust, now the country’s largest office REIT by GAV and net operating income (NOI).
These REITs in aggregate offer a diversified exposure to India's key commercial markets like Bengaluru, the National Capital Region, Mumbai Metropolitan Region, Hyderabad, Pune, Chennai, and a few tier, II cities, stated Vishal Singh, Managing Director, Investment Banking, ANAROCK Capital. He added that the portfolios are very well matched with the demand from sectors like technology, BFSI, consulting, e, commerce, and organised retail which are going on increasing trend of leasing activity in India.
The report emphasized that the pace of REIT adoption is indicative of a fundamental change in investor behavior, whereby both domestic and international investors are increasingly opting for regulated, transparent, and income, generating real estate structures rather than going for traditional direct property ownership.
Tax Efficiency and Investor, Friendly Structure
One of the main factors that has helped the expansion of REITs in India is the distributive mode that is tax, efficient. A major part of REITs distributions are combinations of dividends, interest income, and return of capital, which makes them noticeably more appealing than a large number of other yield instruments.
As per ANAROCK, more than 65% of the present REIT distributions are free of tax in the hands of the unitholders, thus increasing post, tax returns. Such a setup has contributed to the popularity of REITs among long, term investors who are looking for stable cash flows especially when there is volatility in the interest rates and uncertainty in the equity market.
Consistent income and capital appreciation
Indian REITs have demonstrated a strong dual return profile, combining steady income distributions with meaningful capital appreciation. Since listing, unit prices of the first four REITs have increased in the range of 25% to 61%, while Knowledge Realty Trust has already delivered gains of about 12% since its market debut.
The Q2 FY26 performance highlights the resilience of Indian REITs as a total-return investment, said Shobhit Agarwal, CEO, ANAROCK Capital. Despite global interest rate fluctuations, REITs continue to offer stable distribution yields between 5.1% and 6%, supported by strong operating fundamentals, he added.
In the second quarter of FY26, India’s five listed REITs collectively distributed more than ₹2,331 crore, marking a nearly 70% year-on-year increase. This growth was driven by rising occupancies, incremental asset additions, and the contribution of newly listed assets.
Over the past five years, Indian REITs have generated an annualised price return of nearly 8.9%, outperforming comparable REIT markets in Singapore, Japan, and Hong Kong, the report noted.
Strong leasing metrics and balance sheet strength
Operationally, India’s REIT portfolios are performing at near-optimal levels. Committed occupancies range between 90% and 96%, and REITs accounted for more than one-fifth of India’s total office leasing activity during the quarter.
Furthermore, the report highlighted re, leasing spreads of 20, 36% and a mark, to, market rental upside of 15, 24% that provide strong visibility for net operating income growth over the next three to four years. These increases are supported by long lease tenures, high, quality tenants, and rising rental cycles in the major office markets.
On the financial side, the five listed REITs are all rated AAA credit by CRISIL and have conservative capital structures. The loan, to, value ratios are between 18% and 31%, which indicates that leverage is being used prudently and there is good balance sheet discipline.
Regulatory push to drive the next growth phase
Looking ahead, a major catalyst for the sector is SEBI’s decision to reclassify REIT units as equity-related instruments from January 1, 2026. This move is expected to facilitate index inclusion and enable mutual funds to significantly increase their exposure to REITs.
With this regulatory change, REITs are likely to move from being perceived as alternative yield products to becoming core components of equity portfolios,Mr. Singh said, adding that India’s REIT market could cross a $20 billion market capitalisation in the near term.
Indias REIT platform, backed by strong governance, high occupancy assets, conservative leverage, and blue, chip tenant profiles, is becoming one of the structural pillars of the countrys commercial real estate ecosystem. With the introduction of more institutional, grade office and retail assets into the REIT framework, the sector is expected to be at the forefront of mobilising long, term capital into India's urban and economic growth narrative by the end of the year, as per a conversation with analysts.
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