Reits: Real Estate Equaliser

For the better part of the last 30 years, I have watched prime real estate do what it does best: compound quietly and reward the patient and wealthy. A house in South Delhi's Greater Kailash commanded a serious sum even in the 1990s and is worth many multiples of that today. If this had happened to an equity portfolio, it would have made it to the front page of every financial newspaper.

This was never a story about real estate in general. It was a story about prime, well-located property in markets like Delhi-NCR (National Capital Region), Mumbai, and Bengaluru, the kind that required real capital to enter even then. The families who bought into that market did not do anything especially clever. They paid the premium such property commanded, held on, and let time and urbanisation do the heavy lifting.

It’s a simple lesson with a caveat: prime real estate has been a dependable engine of wealth creation in India, but only for those who had the capital to buy in.

But capital appreciation, as compelling as it may be, tells only half the story.

Rentals, especially from premium commercial property, have traced a similar upward trajectory over the same period. Grade-A office spaces in top cities today command rents that would have seemed unreal to any developer or investor in the late 1990s. Commercial real estate has proven itself not merely as a store of value but also as a steady income-generating machine.

And yet, for many Indians, this remained just an idea for a very long time. Buying a quality commercial property, especially the kind that houses a global bank’s operations or a technology giant’s headquarter, required capital running into crores.

For all its virtues, real estate looked like a club with a very high membership fee. And thus, the common investor mostly watched the space from the outside.

That is the context in which real estate investment trusts (Reits) need to be understood. Not as a niche financial instrument, but as a structural opening up of an asset class. They allow investors to own a fractional stake in the large, professionally managed portfolios of income-generating real estate. The underlying assets (Grade-A offices and retail spaces in the case of listed Reits in India) are the buildings that multinational corporations call their Indian home.

But you no longer need to buy the building to benefit from it, thanks to Reits.

The Reits market in India has grown up more rapidly especially over the last two years. The Securities and Exchange Board of India (Sebi) has been thoughtful in its approach. The successive rounds of regulatory easing have lowered minimum investment thresholds, improved disclosure norms, and created the conditions for genuine retail participation.

Perhaps, one of the most consequential changes has been the introduction of the Small and Medium Reit (SM Reit) framework. It extends the Reit model to a far larger pool of assets, including the mid-sized, investment-grade properties across office, logistics, and retail.

Today, an investment of as little as `1 lakh can give an individual investor exposure to the same Grade-A commercial real estate that institutional funds have long favoured. A young professional, saving systematically or a retiree seeking an yield better than that of fixed deposits, can now participate in India’s commercial real estate story.

It is worth understanding what Reits currently encompass. India’s listed Reits are, for now, focused on commercial office and retail assets. Residential and logistics assets are yet to open up at scale through this route. But the direction of change is unmistakable, and the current access to institutional quality assets is a meaningful shift.

Reits allow both lump sum investments and systematic investment plans.

Reits are increasingly being treated as a distinct and credible asset class. When compared to equity and debt instruments, fixed deposits, gold and silver, Reits offer a rare combination. They provide rental income, and have the potential for long-term capital appreciation as the underlying assets grow.

For a personal finance reader thinking about portfolio diversification, that is a meaningful proposition. Reits are not a replacement for any of the above instruments; they are more of an addition to the toolkit. They just happen to be backed by the very brick and mortar that has quietly made money for families over the past several decades.

The data tells the story more clearly. The office leasing in India hit 82.60 million square feet (sq.ft) across nine major cities in 2025, the third consecutive record year, and is showing no signs of pausing. In the January-March quarter of 2026 alone, gross leasing clocked 20.7 million sq.ft, the highest ever in a single quarter.

The driver of much of this momentum are the global capability centres (GCCs). These centres are the multi-functional hubs that multinational corporations are betting their futures on. It is not speculative demand chasing a trend. The capital inflows into Indian real estate also surged 72 per cent to $5.1 billion during the quarter, the highest quarterly inflow ever recorded. Notably, Reits have emerged as a primary driver of this institutional confidence.

The investor appetite also extends well beyond the assets already listed. Our estimates suggest that the country’s SM Reit market has the potential to exceed $75 billion (approximately `6.25 lakh crore), supported by a pipeline of over 500 million sq.ft of eligible office, logistics, and retail assets.

The quality of the underlying assets reinforces the case further. Around 79 per cent of total office leasing in the first quarter of 2026 was concentrated in green-certified buildings, with 70 per cent of transactions in less than 10-year-old properties.

Interestingly, the broader office market sentiment has led the Asia-Pacific region. The office market sentiment, for India, is consistently the highest among all regional markets, and the only one where sentiment across most of the sectors remain in positive territory.

More than a pitch, these numbers are a backdrop. They describe that commercial real estate in India has moved well beyond cyclical noise into structural depth. This justifies treating the asset class seriously. Reits make real estate access available to a far larger pool of investors.

(The views are personal)

Anshuman Magazine Chairman & CEO - India, South-East Asia, Middle East & Africa at CBRE