Sebi Targets Retail Participation In REITs And InvITs - Know Market Regulator’s Plan To Boost Investment

Securities Exchange Board of India Chairman, Tuhin Kanta Pandey, spoke about Sebi’s move to increase retail participation in REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) at the National Conclave on REITs & InvITs 2025.

Pandey talked about the progress made in terms of investor participation in REITs and InvITs and said that the combined AUM of REITs, InvITs, and SM REITs is estimated to be around Rs 9.25 trillion

“As of October 2025, the combined AUM of REITs, InvITs, and SM REITs is estimated to be around Rs 9.25 trillion, around Rs 7 trillion in INVITs and Rs 2.25 trillion in REITs and SM REITs,” Pandey said.

Pandey highlighted that while overall investor participation in REITs and InvITs has increased, participation from retail investors remains low. Citing an investor survey by the Sebi, he said that only 10 per cent of the total investor base in India is aware of REITs and InvITs as assets. However, Pandey added that this must change, and participation from the retail segment must increase.

“Retail participation in REITs and InvITs is still low. Our investor survey shows that awareness about these instruments is around 10 per cent, with penetration less than 1 per cent. This must change,” Pandey said.

Here’s a look at some of the key measures Sebi plans to undertake to increase retail participation:

Investment in REITs and InvITs Via MF Route

Pandey talked about the recent reclassification of REITs as equity assets. Previously, REITs were often classified as "hybrid" instruments. Reclassification as "equity" means equity-focused mutual funds can now invest in them more easily. Pandey added that this is expected to unlock large-scale capital from the mutual fund industry into REITs, creating a new, strong base of demand. A higher number of institutional buyers (mutual funds, index funds) in the market is expected to make it easier and quicker for investors to buy or sell REIT units.

“On the developmental side, the REIT reclassification as equity will enable equity mutual funds to allocate more meaningfully and pave the way for index inclusion and passive flows. And that will also leave more room for the funds to go into InvITs on the hybrid side,” Pandey said.

Lower Investment Thresholds

Sebi reduced the minimum investment required for InvITs recently. Pandey added that the move is expected to boost retail participation and enhance liquidity. Prior to the change, the minimum application value for InvITs was as high as Rs 1,00,000; SEBI reduced this requirement to a range of Rs 10,000 to Rs 15,000 for publicly issued InvITs. Furthermore, the trading lot size has been reduced to one unit. The move is expected to boost retail participation from investors who seek more affordable investment avenues.

“Lower thresholds for InvITs will increase the number of potential participants and improve liquidity,” Pandey said.

Ease of Doing Business Measures

Pandey also spoke about new ease of doing business measures, which seek to allow REITs and InvITs to invest in a pool of liquid mutual fund schemes. REITs and InvITs receive rent or tolls (cash flows) but also need to hold a significant portion of cash reserves to pay expenses; these reserves are often parked in short-term instruments such as liquid mutual funds. By allowing REIT/InvIT managers to choose from a wider variety of liquid mutual funds, investors can benefit from a potentially less risky management of the trust's cash reserves, translating into a more stable and higher distribution (yield).

“We are evaluating further ease of doing business measures for REITs and InvITs. We are examining a proposal to expand the pool of liquid mutual fund schemes in which REITs and InvITs can invest by safeguarding investor interests,” Pandey said.

Investment In Greenfield Projects

The Sebi Chairman said that the market regulator is considering allowing InvITs to invest in greenfield projects. At present, publicly listed InvITs have to mandatorily ensure that 80 per cent of their assets are completed, revenue-generating projects. The move can provide InvITs an opportunity to invest in stable, toll, or tariff-generating assets for the listed InvITs, which helps them grow their distributions and potential capital gains over time.

“We are also exploring whether private InvITs, too, may invest in greenfield projects with adequate safeguards. Municipal bonds and state-level InvITs naturally complement this ecosystem,” Pandey said.

Investment In Smaller Real Estate Assets

Pandey talked about the introduction of the SM REIT category. The introduction of the category allows investors to invest in mid-sized assets (Rs 50 crore to Rs 500 crore). These assets may be overlooked by larger REITs. Thus, the move allows investors to diversify their real estate exposure across different cities, micro-markets, and property types (commercial, residential, retail) within the Rs 500 crore scheme limit.

“Creation of SM REITs, this regulated product will allow smaller high-quality real estate assets to be accessible to retail. Strategic investor, the scope has been broadened to enable a wider set of domestic and foreign institutions to anchor REIT and InvIT issuances,” Pandey said.

Enhanced Governance and Guardrails

The Sebi Chairman also talked about the introduction of several governance-related measures that seek to attract retail investors while ensuring their interests are protected. Pandey mentioned that e-voting and video-conferencing have been introduced in the REITs and InvITs segment to allow investors to participate in decision-making and protect their interests. Additionally, he also talked about the creation of an Investor Charter, which details the grievance redressal mechanisms offered to investors.

“On governance, we have introduced e-voting and video conferencing for investors to be mandatorily provided these options so that they can meaningfully participate in governance. The Investor Charter clearly spells out rights, responsibilities, dos and don'ts, and grievance redressal mechanisms,” Pandey said.

Investment From PFRDA, IRDAI, and EPFO

Pandey addressed the need to facilitate the inclusion of REITs in indices. He added that the market regulator is also looking to work with other regulatory bodies such as the IRDAI (Insurance Regulatory and Development Authority of India), PFRDA (Pension Fund Regulatory and Development Authority), and EPFO (Employees' Provident Fund Organisation) to channel capital into REITs and InvITs.

“We are working with IRDAI, PFRDA, and EPFO to facilitate greater participation from their entities under their purview. SEBI will work with all stakeholders to facilitate the inclusion of REITs in indices through an appropriate glide path based on industry feedback,” Pandey said.

Pandey concluded that while the opportunities offered in the REIT and InvIT space are immense, the market is still nascent. He mentioned that while Sebi will provide the enabling framework and guardrails for deepening retail participation in REITs and InvITs, other stakeholders such as industry sponsors, managers, advisors, industry bodies, and intermediaries must also work towards building a ‘deep, liquid and trusted market’.