Summary of this article
Indian REITs yield 6-7 per cent on average that sits comfortably above many mature markets and competes with fixed-income returns while offering scope for capital gains.
Real estate investment trusts (Reits) in India have scaled up quickly since their first listing in 2019, with the market capitalisation now standing near $18 billion as of August 2025, with expectations that it will breach $25 billion by 2030. Yet, the market still represents only a sliver of institutional real estate in India, according to a recent research report titled Indian REITS: A Gateway To Institutional Real Estate released by Anarock and Credai.
Indian REITs yield 6-7 per cent on average that sits comfortably above many mature markets and competes with fixed-income returns while offering scope for capital gains. Distribution yield is the annual cash return an investor receives from a Reit, expressed as a percentage of the current market price of its units (or shares).
Value Of Indian Reit
The value of Indian Reits today is concentrated.
Says Shekhar Patel, president, CREDAI, “Over 60 per cent of India’s Reit market value today rests with very small set of players, with a strong base in Grade A offices linked to IT and BFSI.”
Essentially, concentration means a small number of sponsors and a narrow tenant base can sway market performance. It also means that as those players choose whether to diversify into logistics, retail, or data centres, they will determine the pace at which the broader market matures. In other words, the power lies with sponsors now and investors should judge them not just on current yields, but on pipeline quality and the sponsor’s ability to source and monetise new asset classes.
Growth With Concentrated Foundations
Indian REITs account for about 20 per cent of institutional real estate, a modest share versus the US at 96 per cent, Singapore 55 per cent, and Japan 51 per cent. The reason is simple. The product set in India today is overwhelmingly Grade A offices, because those assets offer scale, transparency and predictable cash-flows necessary for a listed vehicle. Scale is growing: out of about 520 million sq. ft. of Reit-worthy office stock across the top seven cities, only 32 per cent (166 million sq. ft.) is currently listed. That gap is the most important number for domestic investors: there is supply waiting to be folded into listed vehicles, but it has not yet been monetised.
Shobhit Agarwal, CEO, Anarock Capital, adds: “Indian REITs are late to the party, but now lead the dance. Despite its late entry compared to global peers, India has strong fundamentals. The distribution yields, currently averaging at 6-7 per cent, are well above many mature markets, such as the US and Singapore. Average distribution yields of Indian Reits are competitive with fixed-income instruments, but have the added potential for capital appreciation.
The likely path over the next five years is incremental: more listings (the report expects three more Reits over the next four years), gradual diversification into logistics and data centres, and rising institutional allocation.
According to the report, penetration could climb up to 25–30 per cent of institutional real estate by 2030 if sponsors stay active and demand for institutional products persists. Yet the risk of a stall is real: without sufficient asset monetisation, or if office fundamentals sour, the yield advantage will erode.
What Should Investors Do
Indian Reits offer an attractive return profile today. But attractive returns are not a substitute for structural depth. Investors must price concentration risk, monitor sponsor pipelines, and demand transparency on cash-flow sustainability. Interestingly, market regulator, the Securities and Exchange Board of India (Sebi) has also announced that it has reduced the entry threshold amount from Rs 1 crore to Rs 25 lakh in privately listed Reit and infrastructure investment trust (InvIT), as reported by Outlook Money earlier this month.
