India’s REIT market surpasses Hong Kong at Rs 2.3 lakh crore

India’s Real Estate Investment Trust (REIT) market has officially arrived on the global stage, surpassing Hong Kong in size and performance despite being just six years old.

According to ANAROCK Capital’s latest report, India’s REIT is taking a stride; the domestic REIT ecosystem now commands a gross asset value (GAV) of Rs 2.3 lakh crore and a listed market capitalisation of Rs 1.66 lakh crore, making it larger than Hong Kong’s REIT market, even though only 32 per cent of India’s REIT-ready commercial stock is currently listed.

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The report underscores that India’s REIT sector has moved well beyond its experimental phase to become a structural investment powerhouse.

Across five listed REITs, Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India REIT, Nexus Select Trust, and the 2025 entrant Knowledge Realty Trust, India has outperformed mature Asian peers such as Singapore, Japan, and Hong Kong on key metrics including price performance, yields, occupancies, and Environmental, Social, and Governance (ESG) scores.

India’s REIT index has delivered a five-year annualised price return of approximately 8.9 per cent, significantly outperforming several Asian REIT markets that have posted flat or even negative returns over the same period.

Mandatory distribution of at least 90 per cent of net distributable cash flows has transformed REITs into efficient yield vehicles, offering both high-net-worth individuals and retail investors access to Grade-A commercial real estate without the illiquidity and opacity of direct ownership.

Since listing, unit prices of the first four REITs have risen between 25 per cent and 61 per cent, while Knowledge Realty Trust has already gained around 12 per cent since its August 2025 debut. These gains are complemented by steady income streams, with trailing 12-month distribution yields remaining in the attractive 5.1–6.0 per cent range.

India’s listed REIT portfolios now span around 176 million sq ft of Grade-A office and retail space, along with over 2,000 hospitality keys across major markets, including Bengaluru, Mumbai MMR, NCR, Pune, Hyderabad, Chennai, and emerging Tier-II cities. Committed occupancies stand at a robust 90–96 per cent, among the highest globally, with re-leasing spreads of 20–36 per cent and mark-to-market rental upside of 15–24 per cent.

Financially, the sector remains conservatively positioned, with AAA credit ratings across all REITs, leverage levels between 18 per cent and 31 per cent, low-cost debt at 7.4–7.5 per cent, and long maturity profiles with only 38 per cent of debt due over the next four years.

The report also highlights the sector’s growing importance to India’s office market, with REITs accounting for over 20 per cent of pan-India gross office leasing in Q2 FY26. Embassy and Knowledge Realty Trust alone leased approximately 2.5 million sq ft during the quarter.

On the ESG front, Indian REITs rank among the world’s top performers. All five listed REITs hold 5-star GRESB ratings, score in the low-to-mid 90s, use 38–74 per cent green energy, and have committed to net-zero targets between 2030 and the early 2040s.

A key regulatory catalyst is set to further accelerate growth. From January 1, 2026, SEBI will reclassify REITs as ‘equity-related instruments’, moving them out of debt and hybrid categories.

This change is expected to enable index inclusion from mid-2026, allow higher mutual fund and PMS allocations, deepen domestic investor participation, and reduce volatility through improved liquidity.