Units of real estate investment trusts (REITs) may soon be counted as equity and join India’s stock market indices, as the regulator works to attract larger participation from institutions and improve liquidity in these instruments.
The Securities and Exchange Board of India (Sebi) is actively examining the inclusion of REITs in market indices in a phased manner, chairman Tuhin Kanta Pandey said on Friday. While Sebi has taken several steps to make REITs more liquid and retail-oriented, retail participation in these instruments remains low, he noted.
“Sebi will work with all stakeholders to facilitate the inclusion of REITs in indices, through an appropriate glide path. Based on industry feedback, we are evaluating further ease-of-doing-business measures for REITs and InvITs,” Pandey said at the National Conclave on REITs and InvITs in New Delhi.
The reclassification of REITs as equity is one such measure, which will “will enable equity mutual funds to allocate more meaningfully and pave the way for index inclusion and passive flows,” Pandey said.
The regulator is also examining a proposal to expand the pool of liquid mutual fund schemes where real estate and infrastructure investment trusts can invest, Pandey said. “We are also exploring whether private InvITs too may invest in greenfield projects with adequate safeguards.”
REITs and InvITs (infrastructure investment trusts) own large income-generating assets such as office complexes or highways. The trusts issue units to investors much like a mutual fund, and the investors earn a share of the trust’s income from office rentals or highway tolls.
India has around five listed REITs and 24 listed InvITs, owning assets in roads, power transmission, renewables, telecom, warehousing, and commercial real estate. As of October 2025, the combined assets under management of REITs, InvITs, and SM (small and medium) REITs is estimated at around ₹9.25 trillion – roughly ₹7 trillion in InvITs, ₹2.25 trillion in REITs and SM REITs.
Sebi introduced the framework for REITs and InvITs in 2014 to help monetize large, completed assets and attract new capital into the real estate and infrastructure sectors. The market took off with the listing of Embassy Office Parks REIT in 2019, with subsequent regulatory changes like lowering the minimum investment to boost retail participation.
Unlike physical real estate, which requires a large capital outlay and ties investors to a single location, Reits allow entry from as low as ₹500. At the recent Mint Money Festival in Bengaluru, Pratik Dantara, executive committee member of the Indian REITs Association, said REIT returns so far have been encouraging. “Historically, Indian REITs have delivered total returns of about 15% annually—6.5% from dividends and the rest from capital appreciation,” he said.
According to Sebi’s Pandey, creating small REITs will introduce smaller, high-quality real estate assets to retail investors. “The scope of strategic investors has been broadened to enable a wider set of domestic and foreign institutions to anchor REIT and InvIT issuances. Besides, investor outreach programmes on REITs and InvITs are being specifically held for retail investors, investment advisers, and research analysts,” Pandey said, talking about the measures to popularize the investment trusts.
“Retail participation in REITs and InvITs is still low. Our investor survey shows that awareness about these instruments is around 10%, with penetration less than 1%. This must change. The retail investor should see these instruments as natural options in their portfolios, alongside equities, mutual funds, bonds, and bank deposits,” he said.
“…the next phase of India’s infrastructure story must be driven by the dynamism of markets – and within markets, by instruments like REITs and InvITs that connect everyday savings with long-term national assets,” Pandey said.
“India’s REIT and InvIT sector is still emerging, with significant room to grow in depth, scale and diversification. Globally, REITs are a mature asset class. Collectively, REITs account for about 57% of global listed real estate market capitalization, whereas India’s share is still around 12%,” the Sebi chairman said.
Including REITs in indices will attract significant passive funds from index funds and exchange-traded funds, said Preeti Chheda, chief financial officer, Mindspace and member of executive committee, Indian REITs Association. “So far, no passive money was coming into REITs; it was all actively managed money. So, this would be a big measure which could really help liquidity in these instruments,” Chheda said.
