NEW DELHI: India’s commercial real estate sector is moving into a more institutional phase, as highlighted by the Economic Survey 2025-26. The report notes that over 415 million sq ft of office space in the top seven cities is now eligible for REITs, with the emergence of small and medium REITs (SM REITs) offering a regulated investment option for smaller real estate portfolios.
The survey indicates that Bengaluru accounts for 32.6% of the total REIT-ready office stock, emphasizing the substantial number of income-generating commercial assets that remain outside of listed REIT platforms. Other significant contributors include Delhi-NCR, Mumbai, Chennai, Hyderabad, and Pune.
There is also a significant pipeline of stabilised assets that can still be monetised through REIT frameworks.
Starting January 1, 2026, the Securities and Exchange Board of India (SEBI) will classify investments by mutual funds and specialized investment funds (SIFs) in REITs as equity-related instruments. This decision is expected to boost fund participation, enhance market liquidity, and align REIT investments more closely with capital market structures.
Currently, REITs are regulated under the SEBI (REIT) Regulations, 2014, which impose a leverage cap of 49% of asset value and require assets to be held for a minimum of three years. This framework aims to ensure long-term income visibility and protect investors. Notably, REITs operate under a tax pass-through model, where taxation largely shifts to unitholders.
The survey suggests that SM REITs could enhance investor participation and attract institutional funding for a wider array of income-generating real estate assets, serving to complement rather than compete with larger office REITs.
