REITs and Fractional Ownership: Democratizing Real Estate Investing in 2026

India’s real estate investment landscape is poised for a structural shift in 2026, as REITs and fractional ownership platforms move to the forefront of investor participation. According to Deepak Kapoor, Director of the Gulshan Group, recent regulatory developments—especially the introduction of Small and Medium REITs (SM REITs)—are set to unlock a wider pool of income-generating commercial assets for listing.

These vehicles are expected to lower entry barriers for retail investors, offering access to high-quality office and commercial real estate with greater liquidity, transparency, and stable yields. As equity markets remain volatile, REITs and fractional ownership could emerge as key tools in democratizing real estate investing and broadening the asset class’s appeal in 2026.

While the BSE Realty index might have underperformed compared to the Nifty50 in 2025, the physical real estate market exhibited remarkable strength. Fundamental drivers like genuine end-user demand, rising disposable incomes, and unprecedented infrastructure development fuelled robust housing sales. Notably, the luxury and uber luxury segments dominated sales value in major metros. Simultaneously, the commercial office segment saw record absorption, reflecting strong economic confidence. This underlying health confirms real estate's resilience as a core asset class.

Building on 2025's luxury wave, 2026 will see trends mature and branded serviced apartments will emerge as a preferred choice in the luxury segment. Premiumization will extend to holistic, amenity-rich integrated townships with a focus on hospitality-grade amenities. Sustainability transitions from a unique selling point to a baseline expectation. Technology integration will deepen, with smart home features becoming standard. The demand for branded serviced apartments offering a curated lifestyle will continue to be a significant trend.

We anticipate 2026 to attract stronger institutional and foreign capital. Investors will prioritize stable, income-generating assets with clear growth narratives. Topping the list will be Grade-A, ESG-compliant office spaces, particularly those catering to Global Capability Centres (GCCs). The industrial and warehousing sector will remain a major focus. Additionally, data centres, fuelled by digital adoption, will see significant capital allocation as a new-age infrastructure play.

REITs and fractional ownership are set to democratize access in 2026. The recent framework for Small & Medium REITs (SM REITs) is a game-changer, poised to unlock numerous mid-sized assets for listing. For retail investors, these instruments offer a golden opportunity. They allow participation in high-value commercial real estate with smaller capital outlays, providing better liquidity, transparency, and stable yields compared to more volatile equity segments. This will significantly broaden the investor base.

GCCs are now drawn by a strategic value proposition far beyond cost. India's vast, skilled talent pool in STEM fields is the primary magnet. These centres are evolving into innovation hubs for AI, R&D, and product development. Supportive government policies, world-class infrastructure in SEZs and tech parks, and the availability of high-quality, green-certified Grade-A office spaces that meet global standards create a compelling ecosystem. The imminent Jewar Airport is also enhancing the logistical appeal of regions like Noida.

The NCR is experiencing transformative, infrastructure-led growth. Corridors like the Noida Expressway and Noida-Greater Noida Expressway are prime examples, unlocking premium residential and commercial micro-markets. Demand remains robust for luxury and uber luxury housing in these established and emerging corridors. Beyond traditional segments, we see strong momentum in the warehousing and logistics sector, significantly boosted by connectivity to the Jewar Airport.

These cities are now serious contenders, driven by a powerful confluence of factors. Affordability and a superior cost-to-value ratio are key residential drivers. Commercially, government-led infrastructure development, smart city initiatives, and improved connectivity are spurring economic activity. Companies, including GCCs, are tapping into the large, skilled talent pool available there, often with lower attrition rates. This holistic development is creating self-sustaining growth cycles.

We anticipate rental yields to hold stable or see moderate growth in prime commercial segments like offices and warehousing, supported by strong occupier demand and a demand for quality spaces. In the residential sector, while capital appreciation has been significant, rental yields may see slight improvement as urbanization and job growth fuel rental demand, particularly in high-demand luxury micro-markets.

For this corpus, a blended approach is wise. Consider allocating a portion to fractional ownership or an SM REIT focused on Grade-A offices in tech hubs. For direct investment, a premium apartment in an emerging, infrastructure-linked micro-market of the NCR holds strong potential. Besides, under-construction projects in cities close to metros, as well as those in the emerging residential/commercial hubs, offer value propositions in the Rs 1-2 cr bracket. That apart, Yamuna Expressway, benefiting from the Jewar Airport and sustained commercial demand, offers promising long-term appreciation, especially in projects by established names like Gulshan Group.

2025 offered crucial lessons. First, it reaffirmed the resilience of Indian real estate, driven by solid fundamentals. Second, the market’s shift towards luxury and uber luxury housing is now a definitive trend. Third, GCCs have cemented their role as a primary engine for commercial space absorption. Finally, increased institutionalization through regulations has enhanced transparency, boosting investor confidence and paving the way for more structured investment avenues.