India’s REITs emerge as global powerhouse, overtake Hong Kong in size and returns — 6 key points

In just six years, India’s Real Estate Investment Trust (REIT) market has gone from a cautious experiment to one of the most exciting corners of the country’s capital markets. A new report by ANAROCK Capital shows that Indian REITs now command a gross asset value of about Rs 2.3 lakh crore and an equity market capitalisation of around Rs 1.66 lakh crore - bigger than Hong Kong’s REIT market. What makes this rise even more striking is that only about a third of India’s REIT-ready office and retail stock has actually been listed so far, suggesting the runway for growth is still long. Strong rentals, high occupancy, rising distributions and a big regulatory push from SEBI are now turning REITs into a serious option for investors looking beyond traditional property or equities.

From niche product to mainstream investment

India listed its first REIT only in 2019. Since then, the sector has grown rapidly with Embassy Office Parks, Mindspace Business Parks, Brookfield India, Nexus Select Trust and the recently listed Knowledge Realty Trust.

Together, these five trusts now control about 176 million sq ft of Grade A office and retail space across key markets such as Bengaluru, Delhi-NCR, Mumbai, Hyderabad, Pune, Chennai and several tier-II cities. They also run a hospitality platform with more than 2,000 keys.

Vishal Singh, managing director of investment banking at ANAROCK Capital, says REITs have opened the doors of premium commercial real estate to a much wider set of investors. “The structure offers diversification, transparency and regular income, without the headaches of owning property directly. It has made Grade A real estate accessible to both HNIs and retail investors,” he says.

Returns that beat Asian peers

Indian REITs have quietly delivered strong performance. Over the past five years, they have clocked annualised price returns of about 8.9 per cent - comfortably ahead of REIT markets in Singapore, Japan and Hong Kong, where returns have been flat or even negative in the same period.

Unit prices of the first four REITs have risen between 25 and 61 per cent since listing, while Knowledge Realty Trust has already gained around 12 per cent in just a few months.

On top of that, investors have enjoyed steady cash payouts. In the July–September quarter of FY26 alone, REITs distributed about Rs 2,331 crore, nearly 70 per cent higher than a year ago. Trailing yields continue to hover in the attractive 5.1 to 6.0 per cent range.

Occupancy stays high, rents keep improving

Operationally, portfolios remain in good shape. Committed occupancy across listed REITs stands between 90 and 96 per cent, reflecting steady demand from IT, BFSI, consulting and large corporate tenants. During Q2 FY26, REIT-backed properties accounted for more than a fifth of all office leasing across India. Embassy and Knowledge alone leased about 2.5 million sq ft in the quarter.

Re-leasing spreads - the jump in rents when leases are renewed are running strong at 20 to 36 per cent. This means even without adding new buildings, landlords are locking in higher income from existing assets.

Balance sheets built for stability

Another big draw is financial discipline. All five listed REITs carry AAA credit ratings and operate with conservative leverage, with loan-to-value ratios between 18 and 31 per cent. Average borrowing costs are around 7.4 to 7.5 per cent, while interest coverage ratios range from 2.2x to 4.0x, giving comfortable headroom even in a tight rate environment. Only about 38 per cent of sector debt matures over the next four years, limiting near-term refinancing risks.

ESG focus lifts global standing

Sustainability has also become a defining theme. All Indian REITs hold top-tier 5-star GRESB ratings, placing them among the best globally on ESG metrics. Renewable energy already meets 38 to 74 per cent of portfolio power needs, and several trusts have committed to net-zero targets between 2030 and the early 2040s. For global investors, this strengthens the case for India as a credible, future-ready REIT market.

SEBI’s reclassification could change the game

A major catalyst is lined up for 2026. Market participants believe this could significantly widen domestic participation and deepen liquidity. “Once REITs start featuring in equity indices, they move from being a niche yield product to a core portfolio holding,” says Singh. With only about 32 per cent of India’s REIT-ready stock currently listed, analysts see plenty of room for new assets and platforms to come to market. Strong leasing demand, visible rent upside of 15 to 24 per cent over the next few years and stable balance sheets provide a solid base for growth.

As SEBI’s reclassification kicks in and more investors look for steady income with capital appreciation, India’s REIT sector appears set for its next leap - not just as a real estate play, but as a mainstream part of the country’s equity markets.

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