India’s Rs 2.3 Lakh Crore REIT Market Surpasses Hong Kong, Emerges as Global Leader

India, Dec 24 : In just six years, India’s Real Estate Investment Trust (REIT) market has transformed from a regulatory experiment into a mainstream investment avenue, emerging as one of the most compelling REIT platforms globally.

According to ANAROCK Capital’s report “India REITs  Taking a Stride”, the country’s REIT ecosystem now commands a gross asset value (GAV) of nearly Rs 2.3 lakh crore, with a combined equity market capitalisation of about Rs 1.66 lakh crore as of September 30, 2025  surpassing Hong Kong’s REIT market. Notably, only around 32% of India’s REIT-eligible commercial real estate stock has been listed, indicating significant growth potential.

The market received a major boost with the listing of Knowledge Realty Trust in August 2025, joining four other listed REITs that collectively own nearly 176 million sq. ft. of Grade-A office and retail assets, alongside a hospitality portfolio of over 2,000 keys across major Indian cities.

Vishal Singh, MD – Investment Banking, ANAROCK Capital, highlighted that India’s REITs provide investors with diversified exposure to key economic corridors including Bengaluru, NCR, Mumbai, Hyderabad, Pune, Chennai, and select Tier-II cities. With tax-efficient distributions, mandatory 90% cash-flow payouts, and steady yield instruments, both retail and HNI investors gain access to institutional-grade commercial real estate without the challenges of illiquidity or opacity.

Strong Returns and Occupancy Metrics
Indian REITs now offer dual benefits of income and capital growth. Unit prices of the first four REITs have appreciated between 25% and 61% since listing, while Knowledge Realty Trust delivered about 12% gains shortly after its debut. Trailing 12-month distribution yields remain stable at 5.1–6.0%, despite interest rate volatility. In Q2 FY26 alone, the five REITs distributed over Rs 2,331 crore to investors  a 70% year-on-year increase, driven by higher occupancies and new asset additions.

Operational performance remains robust, with committed occupancies ranging from 90% to 96% and healthy re-leasing spreads of 20–36%. The sector accounted for over 20% of total pan-India office leasing in Q2 FY26, reflecting sustained demand from blue-chip tenants across technology, BFSI, consulting, and retail sectors.

Global ESG Leadership
Indian REITs are also emerging as global sustainability leaders. All five listed trusts hold GRESB 5-Star ratings, with renewable energy powering 38–74% of portfolio consumption and net-zero targets set between 2030 and the early 2040s.

Regulatory Boost and Future Growth
A pivotal SEBI reclassification effective January 1, 2026, will treat REIT units as equity-related instruments, enabling inclusion in equity indices and boosting mutual fund participation. This regulatory shift is expected to broaden the domestic investor base and help Indian REITs cross a USD 20 billion market capitalization soon.

As 2026 approaches, India’s REIT market is entering a new growth phase, combining stable income, long-term capital appreciation, and strong ESG credentials, positioning it as a structural growth engine in the country’s capital markets.