India’s REIT Mkt Set For Strong Growth: Report

Mumbai: India is witnessing strong growth in its Real Estate Investment Trust (REIT) market, driven by increasing demand for high-quality commercial properties, growing investor interest, and evolving regulations, a new report said. According to CareEdge Ratings, India presents significant opportunities for the development of REIT-able assets, with new REIT launches expected in the coming years. The availability of premium real estate properties is also expected to support the expansion of the country’s REIT portfolio in FY26 and beyond.

The Indian office REIT segment has grown steadily, with total operational stock expanding at a 7 per cent compound annual growth rate (CAGR) over the last six years. REITs now account for over nine per cent of the total office stock across India’s top-8 cities, highlighting their increasing importance in the country’s commercial real estate sector.

India entered the REIT space in 2019 with the listing of Embassy REIT, followed by Mindspace REIT and Brookfield REIT in 2020. In 2023, Nexus REIT became India’s first retail-focused REIT, marking a significant milestone for the sector.

Another REIT, Knowledge Realty Trust, backed by The Blackstone Group and The Sattva Group, is expected to be listed by H1 FY26.This new addition will further expand the REIT market in the country, providing investors with more opportunities.

Financially, Indian REITs maintain a conservative debt profile. As of December 31, 2024, the Net Debt to Gross Asset Value (GAV) ratio stood at 28 per cent, indicating financial stability.Additionally, Sebi’s strict regulations have helped strengthen the structure of REITs, making it easier for them to secure external funding at competitive interest rates.

The growing demand for Grade A commercial real estate in India is creating new opportunities for the development of REIT-worthy assets, the report said.Major cities already have a large inventory of high-quality office spaces leased to blue-chip multinational corporations (MNCs), ensuring a stable rental income for investors.

The expansion of the IT, BFSI, and Global Capability Centres (GCCs) sectors is further increasing the demand for well-located, sustainable, and technology-enabled office spaces.Developers are now focusing on building REIT-ready assets that cater to the needs of corporate occupiers.

Divyesh Shah, Director & Rating Head - Real Estate at CareEdge Ratings, said: “While the current REIT market is mostly office-focused, there is growing interest in diversifying into retail and hospitality sectors.“Organised retail is witnessing rapid growth due to increasing e-commerce penetration and demand for modern retail spaces.”

This shift provides an opportunity for developers to create REIT-able assets in the retail sector. To further expand the market, Sebi has introduced Small and Medium (SM) REITs, lowering the minimum asset value for investment to Rs50 crore, compared to Rs500 crore for traditional REITs.As per the report, this move will increase market participation, improve liquidity, and boost real estate development in Tier-1 and Tier-2 cities.