Budget 2026 Bets Big On REITs, InvITs To Monetise Public Assets

In her Budget 2026 speech on Sunday, Finance Minister Nirmala Sitharaman introduced several key initiatives to expand the use of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

She said that during this past decade, the government has undertaken several initiatives for large-scale enhancement of public infrastructure, including through new financing instruments such as InVITs and Real Estate Investment Trusts (REITs) and institutions like NIIF and NABFID. “We shall continue to focus on developing infrastructure in cities with over 5 lakh population (Tier II and Tier III), which have expanded to become growth centres,” she added.

The FM said that over the years, REITs have emerged as a successful instrument for asset monetisation. “I propose to accelerate recycling of significant real estate assets of CPSEs (central public sector enterprises) through the setting up of dedicated REITs.”

Commenting on the announcement, Rajarshi Dasgupta, Executive Director - Tax, AQUILAW, said, “The Budget’s focus on InvITs and REITs is a clear step toward deepening India’s capital markets and channelling private investment into infrastructure and real estate. Proposals like dedicated REITs for CPSE land aim to make large, income-generating assets more accessible while improving funding efficiency. With clearer regulations and support for infrastructure financing, these measures can boost transparency, liquidity, and investor participation, strengthening secondary markets and diversifying the investment ecosystem over time.”

Tax experts say that for years, thousands of acres of prime government land have sat idle. Budget 2026 wants to change that.

“Budget 2026 is a structural reset for REITs in India. Moving these assets into a REIT structure forces them to become ‘investment-grade’: clear title free from encumbrances and speeded land-use permissions. Public lands will now sit inside professionally-managed, SEBI‑regulated REITs, with equity‑grade disclosure and governance. The combination of title regularisation, clearer land‑use rights, higher foreign investor caps, and a dedicated risk guarantee fund means investors are finally getting clear, legally secure rights when they invest,” said Heena Chheda, Partner, Economic Laws Practice.

Thus, the Union 2026 Budget moves the government from being a ‘landlord’ to an ‘asset manager,’ turning stagnant government land into a liquid, legally secure, and tradable asset class for all investors.

Tanuj Shori, Founder and CEO, Square Yards, noted that the Budget’s continued focus on capital market deepening and asset recycling, including monetisation of public sector real estate through REIT structures, reinforces the role of REITs and InvITs as mainstream investment vehicles.

“We are likely to see a steady rise in new REIT and InvIT listings over the medium term, covering office assets, retail centres, logistics parks, data centres and infrastructure portfolios. For retail investors, this expands access to high-quality, income-generating real assets that were earlier largely available only to institutions. They offer the dual benefit of regular yield visibility and participation in long-term asset appreciation, while providing liquidity through listed markets. Over time, these investment engines in the market will also improve transparency, valuation discipline and governance across the real estate ecosystem, strengthening overall investor confidence.”

“AIFs and REITs typically invest through debt instruments and preference shares. The current proposal envisages PROI investing in equity instruments, which is likely to have a greater impact on the equity markets. AIFs and REITs, therefore, are unlikely to see any material impact, particularly as these investment vehicles already enjoy significant tax advantages, especially when investments are routed through GIFT City,” said Saurabh Bhagat, Chief Financial Officer, Colliers India.