India's Real Estate Investment Trust (REIT) sector has surpassed Hong Kong's REIT market in market capitalization as its gross asset value has reached ₹2.3 lakh crore, as per the reports. The reports further said that India's listed REITs' equity market capitalization is around ₹1.66 lakh crore currently.

Within just six years after India's first REIT listing there has been a rapid growth with only about a third of the country's real estate being converted into REITs and suggesting opportunities for expansion in the future.

The REIT sector has witnessed a surge since its first listing in 2019 with Mindspace, Nexus, Embassy, Brookfield India and Knowledge Realty Trust, India's largest office REIT by GAV and NOI, spanning across areas such as MMR, Bengaluru, NCR, Hyderabad, Pune, Chennai, and key Tier-2 hubs. These platforms offer investors a breakthrough to India's technology, BFSI, consulting, and retail corridors.

The REIT distributions are structured in a tax-efficient manner, comprising dividends, interest, and return of capital, with more than 65% of current distributions being tax-exempt for unitholders. The sector's swift growth is being driven by robust leasing activity in major office hubs and an increasing shift towards transparent and regulated real estate investment options instead of direct property ownership.

Indian REITs since their listing have witnessed steady income and capital appreciation with the unit prices of first four REITs have increased between 25% and 61%, and around 12% for Knowledge Realty Trust.

The Q2 FY26 performance underlines the strength of the total return outlook despite fluctuating interest rates. The capital appreciation and steady distribution yields of around 5.1 to 6% remains appealing to investors seeking steady income.

During the Q2 FY26, India's five REITs together paid out more than ₹2,331 crore, marking a nearly 70% higher year-on-year increase because of the higher occupancies, latest asset additions and the impact of the new listing. Over the last five years, REITs in India have delivered an annualised price return of around 8.9%, overtaking markets such as Singapore, Japan and Hong Kong.

From an operational standpoint, REIT portfolios are operating close to full capacity, with committed occupancies ranging between 90% and 96%, while accounting for over 20% of India's total office leasing during the quarter.

The report also pointed to healthy fundamentals, including re-leasing spreads of 20-36% and a mark-to-market potential of roughly 15-24% on existing rentals, offering strong visibility on net operating income growth over the next three to four years. In addition, the sector continues to benefit from a strong financial position, supported by conservative leverage and robust balance sheets. All five listed REITs are rated AAA by CRISIL, with loan-to-value ratios maintained in the range of 18-31%, underscoring disciplined capital management and long-term financial stability.

From January 1, 2026, SEBI will reclassify REIT units to equity-related instruments. Because of this change, it is expected to facilitate index inclusion and allow mutual funds to increase their allocation to REITs, potentially unlocking a larger pool of domestic capital.

Supported by conservative leverage, top-tier credit ratings, and long-tenure assets leased to established blue-chip occupiers, India's REIT segment is steadily positioning itself as a core component of the real estate market, delivering a balance of predictable income, resilience, and sustainable long-term returns.