The Future Of REITs In India

How Have Real Estate Investment Trusts (REITs) Transformed the Indian Investment Landscape? What is the future of REITs in India?

Since the launch of India’s first publicly listed REIT in 2019, the real estate investment landscape has undergone a major transformation. 

REITs have enabled everyday investors to access large-scale, income-generating properties without owning them directly. 

But how impactful has this change been? 

As of 2025, India’s REIT market has crossed ₹1 lakh crore in market capitalization, showcasing growing investor confidence, regulatory maturity, and the increasing appeal of real estate-backed investments with equity-like liquidity and long-term stability.

REITs Performance in India

Have you ever wondered how many REITs are listed in India? There are many REITs listed in India, but a few of them have gained significant popularity among investors. As of mid-2025, India’s most popular publicly listed REITs are:

1. Embassy Office Parks REIT: India’s first publicly listed REIT, focusing on premium office spaces across major cities.
   
2. Mindspace Business Parks REIT: Specializes in Grade-A office spaces in key metropolitan areas.
   
3. Brookfield India Real Estate Trust: Manages a diversified portfolio of commercial office spaces.
   
4. Nexus Select Trust: Focuses on retail real estate, owning several high-quality shopping malls and commercial properties.

Collectively, these REITs manage over 105 million square feet of Grade-A commercial and retail spaces across India, offering investors a mix of steady income and long-term growth potential.

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Factors Driving the Future Growth of REITs

Future REIT growth will be driven by expanding economic development, urbanization, and increased demand for new asset classes like data centers and logistics. Below are some fundamental factors you must know:

1. Regulatory Reforms and Institutional Participation

In a significant move, the Securities and Exchange Board of India (SEBI) has reclassified REITs as equity instruments. 

This change is expected to enhance the attractiveness of REITs to mutual funds, enabling greater institutional participation and potentially leading to increased investor interest and capital inflows.

2. High-Yield Potential

Indian REITs are currently offering yields between 6% and 7.5%, outperforming many established REIT markets globally. 

This performance highlights India’s emergence as a lucrative destination for real estate investments through REITs.

3. Market Capitalization Growth

The Indian REIT market has grown to USD 18 billion since 2019 and is projected to surpass USD 25 billion by 2029. 

This growth is driven by reforms, diversification into retail, logistics, and data centers, as well as strong institutional investor confidence.

4. Expansion and Diversification

REITs are expanding their portfolios beyond traditional office spaces. For instance, Mindspace REIT has raised ₹1,200 crore through sustainability-linked bonds to enhance energy efficiency and expand its green-certified space.

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Investment Opportunities in REIT Stocks

Investors looking to diversify their portfolios can consider the following top REIT stocks in India for 2025:

*Data as of September 2025.

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If you are interested in investing in REITs in India, then begin your journey now. To start, begin the process of opening a Demat account with a reliable stockbroker.

Still confused about choosing the right stockbroker? Fill in your details in the form below:

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Can You Lose Money in REITs?

While the future of REITs in India and REIT stocks appears promising, investors should be aware of potential challenges:

• Market Volatility:

REITs are traded like equities, which means their prices can fluctuate with market sentiment, demand-supply dynamics, and broader stock trends.

Even if the underlying properties are performing well, short-term market movements can temporarily reduce the value of your investment. This means the price at which you buy or sell units may vary, and there is always a risk of short-term losses.

Being aware of this volatility helps investors stay patient and focus on long-term returns rather than reacting to daily price swings.

• Regulatory Changes and Taxation:

Future changes in tax policies or regulations could affect the profitability of REITs. Knowledge of the Taxation of REITs in India is essential, as dividend income is taxed depending on whether the Special Purpose Vehicle (SPV) has opted for the concessional tax regime under Section 115BAA.

If the SPV has opted for this regime, dividends are taxable in the hands of the investor according to their income tax slab, with TDS applicable.

If the SPV hasn’t opted for Section 115BAA, dividends may be exempt from tax. Such rules can directly influence net returns, so staying updated on taxation and regulations is important for effective planning.

• Economic Factors:

Economic slowdowns, rising interest rates, or a slump in the real estate sector can affect rental income, occupancy rates, and property values, which in turn impact REIT performance.

Even well-managed REITs may see temporary reductions in dividends or slower growth during such periods.

Understanding these economic influences can help investors set realistic expectations and make more informed decisions about portfolio allocation and risk management.

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Conclusion

The future of REITs in India is poised for significant growth, driven by regulatory reforms, high yield potential, and market expansion. 

Investors seeking exposure to the real estate sector without the complexities of direct property ownership can consider REITs as a viable investment option. 

However, it’s essential to stay informed about market dynamics and potential risks to make well-informed investment decisions.

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FAQs

Q1. What does the future of REITs in India look like?

The future of REITs in India looks promising, with projections indicating a market capitalization of over USD 25 billion by 2030. This growth is driven by regulatory reforms, increasing institutional participation, and diversification into sectors like retail, logistics, and data centers.

Q2. How will REIT stocks perform in the future?

REIT stocks in India are expected to deliver steady returns, with current dividend yields ranging from 5.5% to 6.5%. As the market matures, the integration of more asset classes and sustainability-linked bonds will enhance the growth prospects for REIT stocks.

Q3. What are the main risks affecting the future of REITs in India?

The primary risks to the future of REITs in India include market volatility, potential regulatory changes, and economic slowdowns. While the sector is expected to grow, factors such as interest rate fluctuations and real estate market conditions could affect performance.