NEW DELHI: The Pension Fund Regulatory and Development Authority (PFRDA) has clarified the framework for National Pension System (NPS) funds to invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) through a revised master circular on investment guidelines issued on December 10, 2025.
PFRDA has established new exposure limits to govern this investment. Combined investments in REIT and InvIT debt instruments and units must not exceed 3% of a pension fund’s total assets under management. Furthermore, pension funds cannot hold more than 15% of the outstanding debt instruments from a single REIT or InvIT, and their purchase of units in any particular issuance is limited to 5%. These revised rules replace previous restrictive conditions, facilitating easier participation from both government and private pension funds.
Industry leaders view this development as a significant advancement towards enhancing long-term domestic institutional engagement in income-generating real estate.
Ramesh Nair, CEO & MD of Mindspace REIT, remarked that the updated guidelines introduce “two long-awaited reforms,” emphasizing that removing the sponsor rating requirement opens a viable entry for government pension funds into REITs. He further noted that categorizing REITs as part of the equity sector expands the investment opportunities for private pension funds, allowing them more flexibility in allocating resources. “These adjustments bolster the investment framework for retirement-related capital and encourage more consistent participation from both public and private pension funds,” Nair added.
Shirish Godbole, CEO of Knowledge Realty Trust, stated that pension fund participation strengthens the capital foundation for infrastructure and real estate while contributing to the deepening of India’s capital markets. “Their long-term capital improves yield stability and supports the creation of sustained, high-quality assets,” he said.
Amit Shetty, CEO of Embassy REIT, noted that these updated norms represent “a crucial step in reinforcing India’s retirement savings framework.” He mentioned that these changes expand investment options for NPS participants by providing access to high-quality debt, equity, infrastructure, and real estate-related instruments. Shetty described the modifications as a means to channel long-term pension capital into productive Grade-A assets, enhancing retirement outcomes for millions of Indians and affirming the value of transparent, regulated yield products within India’s evolving REIT market.
The updated guidelines are effective immediately and are anticipated to boost domestic institutional participation in the nation’s listed REIT and InvIT platforms, which have largely depended on foreign investment.
