Real Estate Investment Trusts (REITs) have emerged as an important financial instrument in India’s capital markets. Introduced less than a decade ago, they provide a transparent and regulated framework for channelling long-term funds into the country’s real estate sector.
What is a Real Estate Investment Trust (REIT)?
A Real Estate Investment Trust (REIT) is a SEBI-registered trust that owns and manages income-generating commercial properties such as office parks, malls, hotels, and retail spaces. Instead of buying entire properties, investors can pool funds into a REIT, which then distributes earnings from rent and leases among unit holders. This model makes large-scale real estate accessible to retail and institutional investors while ensuring safeguards under SEBI’s regulatory framework.
Evolution of REITs in India
The concept of REITs in India was introduced in 2014, when SEBI issued regulations for Real Estate and Infrastructure Investment Trusts. In 2019, Embassy Office Parks became the first listed REIT, marking a major milestone in India’s real estate market. By September 2025, seven REITs are active, highlighting the steady adoption of this financial instrument in less than a decade.
Rules and Regulatory Framework
REITs in India are closely regulated by SEBI to ensure transparency and investor protection. They must be listed on stock exchanges, and at least 90% of Net Distributable Cash Flow (NDCF) must be distributed to unit holders. Further, the majority of assets must be completed and income-generating, reducing speculative risks that typically exist in real estate.
Market Trends and AUM Growth
The combined Assets Under Management (AUM) of REITs and InvITs crossed ₹9 lakh crore in 2025, with REITs contributing about ₹2.25 lakh crore and InvITs around ₹7 lakh crore. This figure is projected to rise to ₹25 lakh crore by 2030, underscoring their role in India’s financial markets. Major listed REITs include Embassy Office Parks, Mindspace, Brookfield India, Nexus Select Trust, and Knowledge Realty Trust, offering investors diversified exposure to India’s commercial property sector.
Significance of REITs in India
REITs provide multiple benefits to India’s economy and investors. They diversify capital markets, reduce dependence on informal financing channels, and attract long-term institutional investors such as pension funds, insurance companies, and sovereign wealth funds. At the same time, they support India’s rapid urbanisation by funding Grade-A office and retail spaces, which are in high demand in major cities.
Future Prospects of REITs in India
The outlook for REITs in India is strong. With assets expected to expand to ₹25 lakh crore by 2030, government and SEBI-backed reforms will continue to strengthen the sector. New asset classes such as warehousing, logistics, and student housing are likely to be included in REIT portfolios, widening opportunities for investors. Rising foreign capital inflows are also expected as Indian markets deepen and become more attractive globally.
REITs in India represent more than just an investment option—they are a structural reform in capital markets, bridging the gap between real estate and finance. By blending transparency, regulation, and long-term growth potential, REITs are poised to play a key role in India’s urbanisation journey and capital mobilisation in the future.