Real Estate Investment Trusts (REITs) in India: Current Scenario and Future

Real Estate Investment Trusts (REITs) have significantly transformed India's real estate investment landscape since their introduction in 2019. They offer investors a chance to participate in income-generating real estate assets without the complexities of direct property ownership.

Current Scenario

As of March 2025, India's REIT market has experienced substantial growth, positioning itself as the fastest-growing REIT market in the Asia-Pacific region. In 2023, the market expanded by 31% year-on-year, driven in part by the launch of Nexus Select Trust, the country's first publicly listed retail REIT. The Securities and Exchange Board of India (SEBI) has played a pivotal role in making REITs more accessible to retail investors by reducing the minimum investment amount from ₹50,000 to ₹15,000. HOUSIVITY This move has democratized real estate investment, allowing a broader spectrum of investors to participate. Currently, India's REIT market comprises four publicly listed REITs, primarily focusing on commercial office spaces. These REITs have attracted significant institutional and retail investor interest due to their potential for stable rental yields and portfolio diversification.

Future Prospects

The future of REITs in India appears promising, influenced by several key factors:

Economic Growth and Urbanization: Rapid urbanization and economic expansion are increasing demand for commercial and residential properties, providing fertile ground for REIT investments.
Times Property
Government Initiatives: Recent government measures, such as income tax cuts announced in February 2025, are expected to boost disposable income among the middle class, potentially increasing investments in residential real estate and REITs.
reuters.com
Diversification of Asset Classes: There is a growing interest in diversifying REIT portfolios beyond office spaces to include sectors like retail, warehousing, and data centers, which could attract a wider range of investors.
pwc.in
Technological Integration: The adoption of technology in real estate operations, known as PropTech, is enhancing efficiency and transparency, making REITs more attractive to tech-savvy investors.
Times Property
Fractional Ownership and SM REITs: The emergence of Small and Medium REITs (SM REITs) and fractional ownership models is democratizing access to high-value real estate assets, allowing investors to participate with smaller capital outlays.
KPMG

Challenges

Despite the positive outlook, certain challenges persist:

Limited Awareness: Many retail investors remain unaware of REITs and their benefits, necessitating increased educational initiatives.
Sector Concentration: The current focus on office spaces limits exposure to other potentially lucrative sectors like retail and industrial properties.
Regulatory and Taxation Policies: Ongoing regulatory changes and tax implications can impact investor sentiment and returns.

Conclusion

REITs have established themselves as a viable and attractive investment avenue in India's real estate sector. With supportive government policies, economic growth, and increasing investor interest, the REIT market is poised for further expansion and diversification in the coming years.