India's REIT Boom: Top 5 Factors Driving 30% Penetration by 2030
India’s Real Estate Investment Trust (REIT) market is rapidly transitioning from a nascent to an early growth stage, with the potential to increase REIT penetration from 16% to 30% by 2030. This growth is fueled by rising demand from technology and financial firms, strong tenant quality, and the diversification of asset classes.
ReitReal EstateOffice MarketColliersInvestmentReal Estate NewsAug 27, 2025
Rising demand from Global Capability Centres (GCCs), along with increased space uptake by technology and BFSI (Banking, Financial Services, and Insurance) firms, is driving occupancy levels. According to Badal Yagnik, Chief Executive Officer of Colliers India, this trend is expected to accelerate the growth of office REITs in India. For developers and investors, Secondary Business Districts (SBDs) offer a massive opportunity. Moreover, the participation of retail investors has been fueled by REITs' diversification into different asset classes. Vimal Nadar, Senior Director and Head of Research at Colliers India, notes that with strong fundamentals in play, 25-30% of the overall office stock in India can potentially come under REITs by 2030.
The four listed office REITs—Embassy Office Parks, Mindspace Business Parks, Brookfield India Real Estate Trust, and Nexus Select Trust—currently encompass close to 133 million square feet of Grade A office space. Additionally, about 371 million square feet of office assets, accounting for about 46% of the existing Grade A stock, can potentially come under future REITs, as per the Colliers’ report. Across India's top 7 cities, Bengaluru leads the chart with the bulk of additional REITable stock, holding a share of 24%, followed by Hyderabad at 19%.
Existing REITs also have around 34 million square feet of under-construction supply, which will likely become operational in the next 1-2 years. The office sector is the key driver of this trend. New listings, broadening of the occupier base, and growing institutionalization could also help increase the overall REIT penetration.
At a micro-market level, about 223 million square feet or 60% of the additional REITable office stock falls within secondary business districts (SBDs) of the top seven cities in India. Again, Bengaluru leads with a share of 36%, followed by Hyderabad at 29%. While the additional REITable stock is mostly concentrated in SBDs and peripheral business districts (PBDs) of major cities, about 14% of Grade A buildings in central business district (CBD) localities could be turned into future REITs.
There is a significant improvement in tenant quality, which has increased overall occupancy levels and average rentals of properties under REITs. According to the data, office REITs claim occupancy rates exceeding 86%, as the demand for premium office spaces remains robust. Steady rental income growth, long-term leases, and high tenant retention have boosted the overall credibility of REITs.
Despite strong growth, the overall REIT market in India is still relatively smaller compared to other global markets, indicating a huge potential to expand REITs far beyond office spaces to include retail malls, industrial warehouses, hospitals, residential apartments, data centers, and more. Currently, Japan and Singapore are relatively established REIT markets in the APAC region. The REITs/InvITs market in India is smaller in scale, but there is significant potential to scale to newer asset classes beyond listed office, retail, and warehousing portfolios. Interestingly, SEBI has been championing the case for Small and Medium Real Estate Investment Trusts (SM-REITs) in recent years.
Frequently Asked Questions
What is the current REIT penetration in India's office market?
The current REIT penetration in India's office market is around 16%, and it is projected to increase to 25-30% by 2030.
What are the key drivers of growth for office REITs in India?
The key drivers include rising demand from Global Capability Centres (GCCs), increased space uptake by technology and BFSI firms, and strong tenant quality leading to high occupancy rates.
Which cities are leading in additional REITable office stock?
Bengaluru leads with a share of 24%, followed by Hyderabad at 19% of the additional REITable office stock.
What is the potential for REIT expansion in India beyond office spaces?
There is significant potential for REITs to expand into retail malls, industrial warehouses, hospitals, residential apartments, data centers, and more.
What role is SEBI playing in the REIT market?
SEBI has been championing the case for Small and Medium Real Estate Investment Trusts (SM-REITs) to further expand the REIT market in India.
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