Indian REITs Shine with 8.9% Annual Returns, Outpacing Asian Markets
A comprehensive report by Anarock Capital reveals that Indian Real Estate Investment Trust (REIT) indices have delivered an impressive five-year annualised price return of approximately 8.9%. This performance significantly outshines peers in key Asian markets including Singapore, Japan, and Hong Kong, many of which have posted negative or low single-digit returns during the same period.
Rapid Growth and Market Capitalisation Milestones
The Indian REIT sector has achieved remarkable growth, reaching a gross asset value (GAV) of about ₹2.3 lakh crore. This milestone has enabled India to surpass Hong Kong's REIT market in terms of market capitalisation. The equity market capitalisation of India's listed REITs currently stands at approximately ₹1.66 lakh crore.
This rapid expansion has occurred in just six years since India's first REIT listing. With only about one-third of the country's REIT-ready real estate stock monetised so far, the sector possesses substantial headroom for future growth and development.
From Policy Experiment to Mainstream Asset Class
According to the Anarock Capital report titled 'India REITs- Taking a Stride,' India's REIT sector has evolved from a policy experiment into a mainstream asset class commanding significant market presence. The report highlights that in the second quarter of FY26 alone, the five REITs distributed over ₹2,331 crore, representing a nearly 70% year-on-year increase.
This distribution growth has been driven by multiple factors including:
- Higher occupancies across portfolios
- New asset additions to REIT portfolios
- The impact of the latest REIT listing in the market
Strong Operational Fundamentals and Performance Metrics
Operationally, Indian REIT portfolios are performing at near-optimal levels with committed occupancies ranging between 90–96%. The sector accounts for over a fifth of India's gross office leasing in the quarter, demonstrating its growing importance in the commercial real estate landscape.
The report highlights several key operational strengths across India's listed REITs:
- Re-leasing spreads in the range of 20–36%
- Mark-to-market upside of approximately 15–24% on in-place rents
- Clear visibility for net operating income growth over the next three to four years
Financial Strength and Credit Quality
India's REIT sector is backed by fortress balance sheets, with all five REITs carrying AAA ratings from CRISIL. These entities maintain conservative leverage profiles, with loan-to-value ratios ranging from 18% to 31%. This reflects prudent financial management and strong balance sheet fundamentals that support sustainable growth.
The Evolution of REITs in India's Investment Landscape
Traditionally, Indian investors have relied on various avenues for wealth creation including:
- Bank deposits offering safety and predictable returns
- Gold as a traditional store of value
- Physical real estate for its tangible nature and long-term appreciation
- Government-backed schemes for secure investment options
While direct property investment has remained popular, it involves significant challenges including high capital outlays, ongoing maintenance costs, and liquidity constraints. Simultaneously, large-scale infrastructure and real estate development have faced funding challenges, highlighting the need for alternative investment channels.
Regulatory Framework and Market Development
To address these needs and provide structured, transparent investment avenues, the Securities and Exchange Board of India (SEBI) introduced:
- Real Estate Investment Trusts (REITs) in 2014
- Infrastructure Investment Trusts (InvITs) in 2016
These regulatory frameworks align India with global practices and are designed to attract long-term capital into critical sectors while offering investors access to income-generating assets through transparent mechanisms.
Current Market Scale and Institutional Depth
With the listing of Knowledge Realty Trust in August 2025, India now has five listed REITs that collectively control around 176 million square feet of Grade-A office and retail space. This substantial portfolio highlights the growing scale and institutional depth of India's REIT market, positioning it as a significant component of the country's financial ecosystem.
The combination of strong returns, operational excellence, financial stability, and regulatory support positions Indian REITs as an attractive investment option for both domestic and international investors seeking exposure to India's growing real estate sector.
