REIT – Real Estate Investment Trust – is often called “mutual fund for real estate”. Launched in India in 2019, REITs have grown to over ₹1 lakh crore in assets by 2025, with 4 listed REITs on NSE/BSE. It allows small investors to earn rental income and capital appreciation from Grade-A commercial properties without buying physical property. Here’s everything you need to know.
What is a REIT and How It Works:
A REIT pools funds from many investors to buy or manage commercial real estate like office buildings, malls, or retail complexes. The trust collects rent and other income from tenants, then distributes most of the cash flow to unit‑holders. Because the trust is listed on stock exchanges, investors get liquidity — unlike direct property ownership. Moreover, regulations require a REIT to distribute at least 90% of its taxable income to investors.
In India, REITs are governed by the SEBI, which ensures transparency and compliance. This makes REITs a regulated, transparent, and relatively stable way to invest in commercial real estate.
Growth of REITs in India: Recent Trends
Since the first listing in 2019, the REIT market in India has grown rapidly. As of late 2025, there are five publicly listed REITs: Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust and Knowledge Realty Trust.
Combined, these REITs manage assets worth over ₹2.35 lakh crore and cover more than 176 million square feet of Grade A office and retail space across India. In Q2 FY26 alone, they distributed over ₹2,331 crore to more than 3.3 lakh unitholders — a sign of growing investor confidence. The overall REIT‑able commercial property in India is set to nearly double by 2030, fueled by expanding office demand, retail growth, and warehousing needs.
Advantages of REITs for Indian Investors:
- Accessibility: REITs allow investors to own parts of large commercial properties without needing big capital or management skills.
- Regular Income: Since REITs must distribute most income as dividends, investors can earn steady rental‑like income.
- Liquidity: REIT units trade on stock exchanges — meaning investors can buy or sell without hassle.
- Diversification: REITs own multiple properties across cities and sectors. This spreads risk compared to direct real estate.
- Transparency & Regulation: SEBI’s oversight and mandatory disclosures give security and clarity to investors.
Moreover, recent regulatory changes support further growth. In 2025, SEBI reclassified REITs as “equity” instruments, making them eligible for inclusion in equity indices and opening the door for broader participation by mutual funds and institutional investors.
Considerations & What Investors Should Know:
However, like any investment, REITs have some caveats. Returns depend on leasing activity, occupancy rates and economic cycles. If demand for office or retail space drops, rental income — and hence distributions — may pressure. Also, part of REIT distribution may be taxed as interest rather than dividend, which affects post-tax returns.
Therefore, potential investors should check the property type, tenant quality, occupancy levels, and distribution history. For long-term investment, REITs may suit those seeking stable income and moderate growth, rather than quick capital gains.
The Future of REIT in India: Why It Matters
Given India’s rapid urbanization and growing demand for office and retail space, analysts expect REIT penetration to grow significantly. Some forecasts suggest that REITs could cover 25–30% of Grade-A office stock by 2030. Moreover, expansion into logistics, warehousing, data‑centres and retail malls is likely, offering more diversity and opportunities.
For investors, this means increasingly stable and diversified real estate exposure — without the hassles of property ownership. In addition, regulatory support from the Securities and Exchange Board of India (SEBI) has helped build trust and transparency in the REIT market.
Conclusion:
REITs are transforming India’s real estate and investment landscape. What is REIT in India is now not just a technical financial term — it’s a gateway for everyday investors to participate in India’s booming commercial property market. As the market expands and regulations improve, REITs offer a transparent, liquid, and diversified way to benefit from property growth without owning physical assets.
– Ketaki Dandekar (Team Arthology)
Read more about REIT here – https://www.investopedia.com/reit.asp