India's Real Estate Investment Trust market continues to show significant growth potential despite its nascent stage compared to global peers. According to a comprehensive report by Vestian, REITs account for just 19% of India's listed real estate value, substantially lower than the global average of 57%. This gap highlights both the early development phase of India's REIT ecosystem and the substantial opportunity for future expansion.

Current Market Position and Global Comparison

India's REIT market capitalisation represents merely 0.4% of the total stock market, reinforcing its status as an emerging investment segment. In contrast, mature REIT markets demonstrate significantly deeper penetration levels.

The country currently operates five listed REITs, with four focusing on office properties and one serving the retail segment. This concentration reflects the early evolution of the ecosystem, where only office assets have achieved the necessary scale, stability, and institutional maturity for public listings.

Office REITs Leading Market Development

Office REIT portfolios span more than 135 million sq ft, supported by consistent demand from Global Capability Centres, technology firms, and BFSI occupiers. These assets generate stable yields in the 5-7% range, making them attractive to income-oriented investors.

Developers are increasingly preparing to monetise office assets, with Bagmane Developers—backed by Blackstone—expected to launch a ₹4,000.00 crore REIT IPO in early 2026. This development could further deepen institutional participation in the sector.

Retail REITs Present Untapped Opportunities

Retail REITs remain significantly underrepresented despite India's substantial Grade A retail stock exceeding 89 million sq ft. Nexus Select Trust currently stands as the only listed retail REIT in the country, with just 10.60 million sq ft of Grade A mall space under REITs.

Emerging cities including Indore, Coimbatore, Surat, Chandigarh, and Bhubaneswar are expected to contribute meaningfully to the retail REIT pipeline over the next three to five years.

Alternative Asset Classes Driving Future Growth

Beyond offices and retail, alternative asset classes are emerging as the next growth engines for India's REIT ecosystem. Warehousing, industrial parks, logistics facilities, and data centres represent significant expansion opportunities.

Vestian estimates industrial and warehousing REIT and InvIT opportunities could expand from ₹0.70 trillion to ₹1.30 trillion by 2030, mirroring global trends where logistics and data centres form core REIT categories.

Shrinivas Rao, CEO of Vestian, noted that India's REIT market holds "huge upside potential" given its low penetration and the need to diversify beyond offices and selective retail. He emphasised that data centres, logistics, industrial parks, and warehousing offer scalable, yield-bearing opportunities aligned with mature global REIT markets.

Market Outlook and Growth Projections

India's REIT market is transitioning from infancy towards greater maturity, with market capitalisation projected to rise from $18.00 billion in 2025 to $25.00 billion by 2030. REIT-able office assets are expected to double from ₹8.20 trillion to ₹16.00 trillion during this period.

The introduction of Small and Medium REITs, allowing portfolios valued between ₹50.00-500.00 crore, represents a key regulatory development supporting wider market participation. Structures such as PropShare Platina and PropShare Titania are already operational, with additional vehicles expected as smaller commercial assets transition into formal investment platforms.

India's Real Estate Investment Trust (REIT) market has reached a significant milestone in 2025 with its fifth listing, marking a transformative period supported by regulatory reforms and growing investor interest. The market has evolved from questions about scalability to discussions about the pace of future growth, positioning India as an emerging player in the global REIT landscape.

Market Structure and Current Position

India's REIT market, which began its journey in 2014, now comprises five listed trusts that collectively hold a market capitalisation of approximately $18 billion. These REITs function similarly to mutual funds but focus on income-generating real estate assets including offices, malls, and warehouses.

While this represents meaningful progress for the domestic market, India's REIT sector remains relatively small compared to global peers. The United States leads with 196 listed trusts and a market capitalisation of $1.4 trillion, followed by Japan with 57 REITs, Singapore with 39, and Australia with 32.

Regulatory Reforms and Investment Potential

A major catalyst for future growth lies in regulatory reforms scheduled to take effect from January 2026. These changes will reclassify REITs as equities, aligning India's framework more closely with global standards and potentially unlocking substantial institutional investment.

Currently, mutual funds have invested only around ₹23,000 crore in REITs, representing less than 1% of their net asset value despite being permitted to allocate up to 10%. The upcoming reclassification is expected to encourage equity funds to increase their allocations, improve market liquidity, and help establish REITs as a mainstream asset class.

The sector also benefits from favorable tax treatment, with dividends and rental income exempt for investors provided the underlying special purpose vehicles pay corporate tax. Earlier reforms in 2024 reduced the holding period for capital gains from 36 months to 12 months, providing additional momentum.

Performance Metrics and Market Activity

Indian REITs have demonstrated strong performance relative to global benchmarks, according to data from Anarock. The sector faces some operational challenges, with vacancy levels remaining in the 10-16% range, but underlying market activity continues to show strength.

As of October 2025, over 23 million square feet of new Grade A office space was under construction. Global Capability Centres have emerged as a significant demand driver, accounting for 28-29% of gross leasing activity and reinforcing India's position as a global office hub.

Future Growth Prospects

The market is projected to surpass $30 billion in the coming years, with additional momentum expected from the introduction of Small and Medium REITs (SM REITs). This new segment will enable fractional ownership of properties valued between ₹50 crore and ₹500 crore.

CBRE estimates that the SM REIT segment alone could grow to over $75 billion, encompassing nearly 500 million square feet of eligible commercial assets across offices, retail, and logistics sectors. This expansion would significantly broaden the market's reach and provide investors with access to a wider range of real estate investment opportunities.