India’s listed real estate investment trusts are expanding beyond niche investors, driven by regulatory changes, increased liquidity, and attractive tax policies, with the sector poised for substantial growth despite still being in early adoption stages.
India’s listed real estate investment trusts are starting to move from a specialist corner of the market towards something broader, helped by a sequence of regulatory changes that have improved access, liquidity and tax treatment. Following the listing of Bagmane Prime REIT, the combined market capitalisation of listed REITs has climbed above ₹2 lakh crore, underscoring how far the segment has come since Embassy Office Parks REIT became the first to list in March 2019. Business Standard reported that Embassy’s initial offer raised about ₹4,750 crore and was subscribed 2.57 times, a sign that investor appetite was present even at the market’s outset.
The policy backdrop has become markedly more supportive. According to recent reports on SEBI’s rule changes, REITs were reclassified as equity-related instruments with effect from 1 January 2026, a shift designed to make them easier for mutual funds and specialised investment funds to hold. They were then added to broader equity indices in July, opening the door to passive flows from index-tracking funds. At the same time, the Reserve Bank of India has permitted commercial banks to lend directly to REITs and infrastructure investment trusts under a prudential framework from 1 October, although aggregate exposure to any single trust and its related vehicles is capped at 49% of asset value.
Tax policy has also moved in REITs’ favour. The Taxation and Other Laws (Amendment) Bill, 2026 is expected to give trusts and their special purpose vehicles more flexibility on how they are taxed, while preserving the pass-through treatment of dividends paid to unitholders. Earlier reforms had already lowered the entry bar for retail investors, with SEBI cutting the minimum application amount sharply and reducing the trading lot size to a single unit. It also cleared the way for small and medium REITs, broadening the structure beyond large office platforms.
Even so, the market remains narrow. Since the framework was introduced, only six REITs have listed in India, with Knowledge Realty and Embassy Office Parks REIT among the largest by market value. Yet Colliers says the runway remains substantial, estimating that an additional 370 million square feet of existing Grade A office stock could eventually be brought into the listed REIT universe. The consultancy added that office-market REIT penetration could rise to 30% by 2030, supported by green-certified properties, tenant demand and continuing investor interest. The comparison with mature markets such as Singapore, the UK, Australia and Japan suggests India is still early in the adoption cycle, and that broader acceptance may take time despite the recent policy push.
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