NEW DELHI: India’s Real Estate Investment Trust (REIT) market has developed into a significant institutional asset class, with a gross asset value (GAV) reaching approximately ₹2.3 lakh crore and the equity market capitalisation nearing ₹1.66 lakh crore as of September 30, 2025, as reported by Anarock Capital.
Despite only about 32% of India’s REIT-eligible commercial stock being listed, the domestic REIT market has outperformed Hong Kong in market capitalisation, highlighting rapid growth since the first listing in 2019.
Following Knowledge Realty Trust’s listing in August 2025, India now boasts five listed REITs that manage a combined portfolio of around 176 million sq ft of Grade-A office and retail space, in addition to a hospitality platform with over 2,000 keys. These assets are located in key office markets such as Bengaluru, Mumbai Metropolitan Region (MMR), NCR, Hyderabad, Pune, and Chennai, as well as select tier-II cities.
The sector has shown impressive returns in the medium term. Indian REIT indices have achieved a five-year annualised price return of about 8.9%, outperforming counterparts in Singapore, Japan, and Hong Kong, many of which have experienced low or negative returns in that same timeframe.
Income visibility has remained solid, backed by high occupancy rates and rental growth. Distribution yields have consistently hovered in the 5.1–6.0% range. In the second quarter of FY26, distributions from the five listed REITs surged nearly 70% year-on-year to around ₹2,331 crore, propelled by new asset additions, improved leasing, and the inclusion of Knowledge Realty Trust.
Portfolio fundamentals are strong, with committed occupancies ranging from 90% to 96%. Re-leasing spreads have remained robust at 20–36%, while the mark-to-market potential on existing rents is estimated between 15–24%, indicating potential for net operating income growth over the next three to four years. During Q2 FY26, REIT-owned assets represented over 20% of total gross office leasing across India.
The balance sheets of listed REITs continue to be conservative, with all five trusts holding AAA credit ratings. Loan-to-value ratios are between 18% and 31%, average borrowing costs are around 7.4–7.5%, and interest coverage ratios range from 2.2x to 4.0x. Approximately 38% of outstanding debt is due for repayment within the next four years, minimizing refinancing risks in the near future.
A key regulatory driver for the sector is the Securities and Exchange Board of India’s (Sebi) decision to classify REIT units as ‘equity-related instruments’ effective January 1, 2026. This change is expected to facilitate the inclusion of REITs in equity indices and increase allocations by mutual funds, likely broadening domestic institutional and retail investment.
