Indian REITs: High Yields and Growing Potential in the Real Estate Market
Indian REITs are delivering impressive distribution yields of 6-7%, outpacing global benchmarks. With new REITs expected to launch over the next few years, the sector is poised to reach $25 billion by 2030.
ReitsReal EstateInvestmentYieldsMarket GrowthReal Estate NewsSep 12, 2025
India’s REIT market, though relatively young, has grown to a market capitalisation of around $18 billion as of August 2025. With three new REITs expected over the next four years, the sector is projected to cross $25 billion by 2030.
“Indian REITs are late to the party, but now lead the dance,” said Shobhit Agarwal, CEO of ANAROCK Capital. “The distribution yields, currently averaging at 6-7 per cent, are well above many mature markets such as the US and Singapore. They are competitive with fixed-income instruments but carry the added potential for capital appreciation.”
Despite the attractive yields, the sector’s diversification remains limited compared to global peers. Over 60 per cent of India’s REIT market is concentrated in Grade A office assets, largely linked to IT and BFSI occupiers. In contrast, markets like the US, Singapore, and Japan have well-established REITs in retail, industrial, and specialised segments such as data centres.
REITs in India account for about 20 per cent of the institutional real estate market, far lower than the US (96 per cent), Singapore (55 per cent), and Japan (51 per cent). Out of nearly 520 million sqft of REITable office stock across India’s top seven cities, only about 166 million sqft — or 32 per cent — has been listed. Industry players expect this penetration to rise to 25-30 per cent by 2030 as new asset classes such as logistics, retail, and data centres come into play.
“As India’s cities grow, infrastructure strengthens, and the economy diversifies, REITs will expand into retail, logistics, housing, and new-age assets,” said Shekhar Patel, president of CREDAI.
Globally, industrial and data centre REITs are expanding rapidly, driven by e-commerce penetration and rising cloud adoption. Data centre REITs, valued at $250 billion in 2024, are projected to double within seven years. India is seen mirroring this trend, with industrial and logistics leasing surging 60 per cent year-on-year in H1 2025, warehousing absorption rising 30 per cent, and institutional investment in the segment tripling to $2.5 billion in 2024.
Progressive reforms have helped strengthen investor confidence in Indian REITs. Since SEBI’s introduction of REIT regulations in 2014, changes such as the reduction in lot sizes, simplified capital gains, and dividend tax exemptions (introduced in 2025) have boosted transparency and retail participation. However, taxation remains a differentiator with mature markets. While dividends from REITs are generally taxed at lower rates in the US and Singapore, Indian REIT distributions are taxed at individual slab rates, slightly dampening their appeal for small investors.
Frequently Asked Questions
What are the current distribution yields of Indian REITs?
Indian REITs are currently offering average distribution yields of 6-7 per cent, which are higher than those in many mature markets like the US and Singapore.
What is the projected market capitalisation of Indian REITs by 2030?
The Indian REIT sector is projected to cross $25 billion by 2030, with three new REITs expected to launch over the next four years.
What percentage of the institutional real estate market do REITs account for in India?
REITs in India account for about 20 per cent of the institutional real estate market, which is far lower than in the US (96 per cent), Singapore (55 per cent), and Japan (51 per cent).
What new asset classes are expected to be included in Indian REITs?
New asset classes such as logistics, retail, and data centres are expected to be included in Indian REITs as the market diversifies and grows.
What reforms have been introduced to boost investor confidence in Indian REITs?
Since 2014, SEBI has introduced reforms such as reducing lot sizes, simplifying capital gains, and introducing dividend tax exemptions to boost transparency and retail participation in Indian REITs.
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