Mumbai, 10th March 2025: According to CareEdge ratings, India presents significant opportunities for the development of REIT-able assets, driven by strong demand for institutional-grade real estate, increasing investor interest, and evolving regulatory frameworks. CareEdge Ratings anticipates a sustained expansion of India’s REIT portfolio in FY26 and ahead, fuelled by a combination of upcoming REIT launches and the abundant availability of high-quality, REIT-worthy assets.
According to CareEdge Ratings, the Indian office REIT segment has witnessed remarkable growth, with total operational stock expanding at a CAGR of 7% over the six years ended CY24. Additionally, REITs have consistently accounted for over 9% of the total office stock across India’s top eight cities, reflecting their growing prominence in commercial real estate.
Rajashree Murkute, Senior Director & Head – Corporate & Infra Ratings, CareEdge Ratings said, “The Indian REIT market is poised for sustained expansion, fueled by a combination of upcoming REIT launches and the abundant availability of high-quality, REIT-worthy assets. This growth is expected to be driven by a robust pipeline of Grade A commercial real estate and increasing investor interest in diversified sectors”.
India entered the REIT space in 2019 with the launch of Embassy REIT, followed by Mindspace REIT and Brookfield REIT in 2020. In 2023, Nexus REIT—India’s first retail-focused REIT—was listed on domestic exchanges, marking a significant milestone for the sector. Additionally, Knowledge Realty Trust (sponsored by The Blackstone Group and The Sattva Group), with an operational leasable area of 37.1 msf, is proposed to be listed as a REIT by H1 FY26.
From a financial standpoint, Indian REITs maintain a conservative leverage profile, with a Net Debt to Gross Asset Value (GAV) ratio of 28% as on December 31, 2024. Furthermore, stringent regulations enforced by the Securities and Exchange Board of India (SEBI) have strengthened the structural integrity of REITs, enabling them to access external debt at competitive interest rates.
Development of REIT-able assets
CareEdge Ratings sees a Large Pipeline of Grade A Commercial Real Estate, Strong Demand for Commercial Properties, and Expansion Beyond Office REITs and SME REITs as Opportunities for the Development of REIT-able Assets. India has a substantial inventory of high-quality office spaces, particularly in top eight cities. Many of these assets are already leased to blue-chip MNCs, ensuring stable rental income.
The growth of IT, BFSI, and Global Capability Centres (GCCs) in India is driving strong demand for high-quality commercial real estate. Companies are increasingly seeking sustainable, well-located, and technology-enabled office spaces, creating opportunities for developers to build REIT-ready assets that cater to corporate occupiers.
while the current REIT market in India is office-focused, there is growing interest in diversifying into retail and hospitality sectors. The organized retail is witnessing rapid growth due to rising e-commerce penetration and strong demand for modern retail spaces. This presents an opportunity for developers to create REIT-able assets in this sector.
SEBI has recently introduced SM REITs wherein the minimum asset value for investment is set at Rs.50 crore as against Rs.500 crore for traditional REITs. As per CareEdge Ratings, the move is likely to widen market participation, enhance liquidity, and boost real estate development in Tier-1 and Tier-2 cities.