The proposed rules would let REITs and InvITs take minority stakes in under-construction, third-party projects, widening their asset pipeline while giving developers a new way to raise capital without surrendering control.
India’s markets regulator is weighing a change that could broaden the deal flow available to real estate and infrastructure trusts, with SEBI exploring a proposal that would let REITs and InvITs buy into third-party projects under specified conditions. The idea is aimed at easing supply constraints and giving the trusts access to a wider set of income-producing assets, rather than relying mainly on projects brought in by sponsor-developers. At a real estate investment summit in Mumbai, SEBI executive director Maninder Cheema said the existing pipeline can be limited when assets depend on transfers from developers, and argued that the industry needs more flexible structures to unlock demand and returns.
The proposal, outlined in SEBI’s consultation paper in August, would allow REITs and InvITs to take minority stakes in under-construction projects without acquiring control, while staying within the current caps for such investments. Business Standard reported that SEBI invited public comments on the draft until August 27, 2026, and also suggested other rule changes, including a shorter cooling-off period for privately placed InvITs and a broader definition of real estate to include remote common infrastructure. The Times of India said the aim is to help REITs build a future pipeline of assets that can later generate stable cash flow.
The broader policy push reflects a desire to help developers raise capital without selling projects outright, while still giving trusts access to a larger universe of assets. Business Standard said the proposed structure could allow developers to retain control while monetising part of a project, potentially creating another funding channel at a time when capital needs remain high. VCCircle likewise reported that SEBI wants any such investments to remain within existing exposure limits and to be restricted to real estate- or infrastructure-linked entities, underscoring the regulator’s focus on risk control.
Cheema also used the Mumbai event to highlight how much the sector has already scaled. He said REITs now hold more than Rs 3 lakh crore of assets across more than 214 million square feet of Grade A office space, and that they distributed Rs 3,000 crore to investors in the first quarter of the year. He added that InvITs paid out Rs 5,900 crore in the previous quarter and had grown to a unit-holder base of 6.5 lakh, while foreign capital accounts for 30% to 40% of the combined Rs 10.5 lakh crore in assets under management across REITs and InvITs. Cheema said a key next step is to deepen domestic participation, especially from insurers and pension funds, which could provide a steadier source of long-term money for the sector.
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