India's REITs Gain Momentum as SEBI Reclassification Attracts Investors
India’s Real Estate Investment Trusts (REITs) are witnessing a surge in investor interest following a recent reclassification by SEBI, positioning them as mainstream equity instruments.
ReitsReal EstateEquity InstrumentsProperty DevelopersInvestor FlowsReal Estate NewsSep 26, 2025
"REITs are already gaining popularity as an asset class among HNIs and institutions, and while the reclassification does not materially change their participation, it does reinforce the position of the instrument as a mainstream equity-linked product with liquidity as high as listed stocks," said Sahil Kapoor, head of Products at 360 ONE Wealth.
REITs, which own or operate income-generating properties, allow investors to earn returns from units without the need to directly purchase real estate. These instruments are typically low-beta, offering more stability compared to the volatile listed real estate stocks. The reclassification has made REITs more attractive as mainstream equity instruments, attracting mutual fund investments and boosting the chances of index inclusions.
Embassy Office Park REIT rose 2% on Thursday, while Mindspace Business Park REIT and Nexus Select Trust gained 1.3% and 1.1%, respectively. Brookfield India Real Estate Trust and Knowledge Realty Trust advanced about 0.5% each. Last week, Nexus Select Trust jumped 5.6%, Mindspace gained 3.7%, and Brookfield rose 2.9%. Embassy and Knowledge Realty added 1.3% and 4.3% each.
Meanwhile, the Nifty Realty index fell 1.7% on Thursday, extending a four-day losing streak, after dropping 7.5% in July and 4.6% in August. It had gained more than 4% last week.
"Fund managers who are cautious about the risks in real estate equities may prefer REITs as a way to maintain exposure to the sector with relatively lower volatility and risk involved," Kapoor noted.
REITs differ from listed real estate developers in that they own and operate income-generating assets such as offices and malls, distributing most of the rental income to unit holders. When investors bet on shares of property developers, they are focusing on the earnings, making returns more volatile.
Frequently Asked Questions
What is a Real Estate Investment Trust (REIT)?
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate. REITs allow investors to earn returns from the rental income of these properties without directly purchasing real estate.
Why did SEBI reclassify REITs as equity instruments?
SEBI reclassified REITs as equity instruments to reinforce their position as mainstream investment vehicles, attract more institutional and retail investors, and enhance liquidity.
How do REITs differ from listed property developers?
REITs own and operate income-generating assets like offices and malls, distributing most of the rental income to unit holders. Listed property developers, on the other hand, focus on earnings from property development, making their returns more volatile.
What are the benefits of investing in REITs?
REITs offer several benefits, including stable returns, diversification, and liquidity. They are typically low-beta instruments, providing more stability compared to volatile listed real estate stocks.
Which REITs have seen significant gains recently?
Recently, Nexus Select Trust, Mindspace Business Park REIT, Brookfield India Real Estate Trust, and Knowledge Realty Trust have seen notable gains, with Nexus Select Trust jumping 5.6% and Mindspace gaining 3.7% last week.
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