Indian REITs Poised for $25 Billion Market Cap with Attractive Yields

India’s real estate investment trust (REIT) market, though relatively young, is now delivering higher returns than several mature global peers, according to a joint report by ANAROCK and the Confederation of Real Estate Developers’ Associations of India (CREDAI).

Distribution yields from Indian REITs are averaging 6–7 per cent, compared with 2.5–3.5 per cent in the United States, 5–6 per cent in Singapore, and 4.5–5.5 per cent in Japan. The findings indicate that Indian REITs, despite their late start, have established a strong value proposition for both institutional and retail investors.

The country’s first REIT was listed in 2019, marking a new phase of financialisation in real estate. Since then, the sector has expanded to reach a market capitalisation of about $18 billion as of August 2025. The report projects this figure could cross $25 billion by 2030, driven by investor appetite and diversification into new asset classes.

However, India’s REIT penetration remains modest at 20 per cent of institutional-grade real estate, compared with 96 per cent in the US, 55 per cent in Singapore, and 51 per cent in Japan. Industry participants believe the gap reflects both the growth potential of the Indian market and the need for structural expansion.

Currently, Indian REITs are concentrated in Grade A office assets, which provide scale, transparency, and stable rental flows. The next phase of growth is expected to include diversification into logistics parks, data centres, and retail malls. Rising demand from e-commerce, digitalisation, and organised retail consolidation are likely catalysts. Residential REITs, however, remain a longer-term possibility, constrained by low rental yields and fragmented ownership structures.

The report highlighted that regulatory support has been instrumental in sustaining investor confidence. Since the Securities and Exchange Board of India (Sebi) introduced REIT regulations in 2014, subsequent reforms have lowered minimum investment lot sizes, simplified capital gains treatment, and, most recently in 2025, introduced dividend tax exemptions. These changes have widened retail participation and improved transparency, aligning the market with global standards.

Nevertheless, taxation remains a relative disadvantage. While Indian REIT dividends are now exempt for investors, comparative jurisdictions such as the US and Singapore continue to provide more favourable structures, making them relatively more attractive for certain investor segments.

Shekhar Patel, president of CREDAI, said more than 60 per cent of India’s REIT value is concentrated among a few players operating in the Grade A office space, largely tied to the IT and banking sectors. He added that the industry sees significant potential as REITs expand into retail, logistics, housing, and emerging asset classes.

According to ANAROCK Capital, the higher yields in India remain competitive with fixed-income products and also carry the potential for capital appreciation. This dual benefit is expected to sustain investor interest, even as the sector gradually matures and penetration deepens.

As the report notes, India’s REITs may be late entrants compared to other markets, but their trajectory suggests increasing relevance in both domestic and global real estate capital flows.