What makes this milestone even more striking is that only about 32% of India’s REIT-grade commercial real estate stocks have been listed to date, underscoring the vast scope for future growth.The sector received a major boost with the listing of Knowledge Realty Trust in August 2025. With this addition, five listed REITs now collectively own and operate nearly 176 million square feet of prime office and retail properties, along with a hospitality platform with over 2,000 keys across major Indian cities.
Vishal Singh, Managing Director – Investment Banking, ANAROCK Capital, notes that since India’s first REIT listing in 2019, the market has expanded rapidly through platforms such as Embassy, Mindspace, Brookfield India, Nexus and now Knowledge Realty Trust – the country’s largest office REIT as measured by both GAV and net operating income.
“These REITs provide investors with diversified exposure to India’s key economic corridors including Bengaluru, NCR, Mumbai Metropolitan Region, Hyderabad, Pune, Chennai and select Tier-II cities. Importantly, the distributions are structured in a tax-efficient manner through a combination of dividend, interest and capital return, with over 65% of current distributions in the hands of shareholders being tax exempt,” he says.
The mandatory requirement to distribute at least 90% of net distributable cash flows has helped REITs establish themselves as efficient return vehicles, allowing both retail investors and HNIs access to institutional-quality commercial real estate without the problems of illiquidity or opacity associated with direct real estate ownership.
Double engine of income and growth
The Indian REIT story is no longer just about returns. According to Shobhit Agarwal, CEO of ANAROCK Capital, the performance in the second quarter of 2026 underlines a robust total return proposition.
“Since listing, unit prices of the first four REITs have risen between 25% and 61%, while Knowledge Realty Trust has already achieved gains of around 12% in a short time,” he says.
This price increase is supported by steady cash flows. The returns on the last twelve-month payments have remained stable in the range of 5.1 to 6.0%, even despite the volatility of interest rates. In the second quarter of FY26 alone, the five REITs distributed Rs 2,331 crore to investors – a sharp increase of 70% year-on-year, driven by higher occupancy, new asset additions and the inclusion of Knowledge REIT.
Over the longer term, Indian REIT indices have delivered a five-year annualized price return of almost 8.9%, significantly outperforming the REIT markets in Singapore, Japan and Hong Kong, many of which suffered negative or low single-digit returns over the same period.
Strong occupancy rates and blue-chip tenants
The operating figures remain equally encouraging. Committed occupancy rates in the Indian REIT portfolios are between 90% and 96%, supported by healthy re-letting spreads of 20% to 36%.
In Q2 FY26, the REIT sector accounted for more than 20% of total pan-India gross office leasing, with Embassy and Knowledge Realty Trust alone leasing nearly 2.5 million sq ft.
This leasing momentum reflects continued demand from top tenants across the technology, BFSI, consultancy and retail sectors, strengthening the stability of underlying cash flows.
ESG leadership comes to the fore
Indian REITs are also emerging as global leaders in sustainability. All five listed trusts have achieved a 5-star GRESB rating, putting them in the global top decile with scores in the low to mid-90s.
Renewables already account for between 38% and 74% of portfolio consumption, while net-zero targets extend as early as 2030 for Nexus to early 2040 for other countries.
SEBI reclassification to unlock the next phase of growth
A critical regulatory change will redefine the industry’s trajectory. In November 2025, SEBI reclassified REIT units as equity-linked instruments with effect from January 1, 2026.
This move shifts exposure to REITs from debt or hybrid categories to regular equity allocations, paving the way for index inclusion from mid-2026 and allowing greater participation in mutual funds.
According to Vishal Singh, this change could significantly broaden the domestic investor base. “With SEBI’s reclassification coming into effect in January, Indian REITs are poised to evolve from high-yield alternatives to core holdings in equity portfolios. Supported by index inclusion and rising domestic participation, the sector is well positioned to cross USD 20 billion market cap in the near term,” he says.
As 2026 approaches, the Indian REIT market appears to be entering a new phase: one that combines stable income, long-term capital growth and strong ESG credentials. The rise of REITs is more than just a revival of the real estate sector, but signals the emergence of a structural growth engine that could play a defining role in Indian capital markets over the next decade.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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