REITs Reclassified as Equity: A Game-Changer for Real Estate Investment
The reclassification of Real Estate Investment Trusts (REITs) as equity will make them eligible for inclusion in benchmark indices, attracting mutual funds and institutional investors. This move is expected to benefit developers, investors, and the overall real estate market.
ReitsReal EstateEquityMutual FundsInstitutional InvestorsReal Estate MumbaiSep 14, 2025
Developers will benefit from lower financing costs and more diversified funding options. Meanwhile, investors can diversify their portfolios by investing in real estate with the potential for steady dividends and capital appreciation, all without the illiquidity associated with direct property ownership.
An REIT is an entity that owns income-generating real estate properties. Investors earn returns from the rents and dividends generated by these properties without the need to own the properties directly. This structure makes REITs an attractive investment option for a wide range of investors.
Venkat N Chalsani, the chief executive of the mutual fund industry body Amfi, commented on the reclassification. 'The reclassification of REITs as 'equity' for mutual fund investments is a timely step that will enhance diversification opportunities and support the growth of real estate as an investible asset class,' he said.
These initiatives are expected to broaden investor participation, strengthen the long-term health of the mutual fund industry, and strike a thoughtful balance between regulatory rigor, investor protection, and ease of doing business.
For REIT managers, the move is equally transformative. Amit Shetty, the chief executive of Embassy REIT, stated, 'At Embassy REIT, we see this as a catalyst to broaden investor participation, enhance liquidity, enable future index inclusion, and further strengthen REITs as a mainstream investment asset class.'
According to a report by Anarock, the REIT market has grown steadily since the first listing in 2019. As of August 2025, the market has a capitalization of about $18 billion. With three more listings expected in the next four years, the market is projected to cross $25 billion by 2030. However, this represents only about 20% of institutional real estate, indicating significant room for growth.
The reclassification of REITs as equity is a strategic move that aligns with the broader goals of enhancing investor participation and liquidity in the real estate sector. It is expected to bring more institutional and retail investors into the market, contributing to the overall stability and growth of the real estate industry in India.
Frequently Asked Questions
What is a Real Estate Investment Trust (REIT)?
A Real Estate Investment Trust (REIT) is an entity that owns income-generating real estate properties. Investors can earn returns from the rents and dividends generated by these properties without the need to own the properties directly.
Why is the reclassification of REITs as equity significant?
The reclassification of REITs as equity makes them eligible for inclusion in benchmark indices, which will attract mutual funds and institutional investors. This move is expected to benefit developers by providing lower financing costs and more diversified funding options.
How will this reclassification impact investors?
Investors will have the opportunity to diversify their portfolios by investing in real estate with the potential for steady dividends and capital appreciation, all without the illiquidity associated with direct property ownership.
What is the current market capitalization of REITs in India?
As of August 2025, the market capitalization of REITs in India is about $18 billion. With three more listings expected in the next four years, the market is projected to cross $25 billion by 2030.
Who are some key stakeholders in the REIT market in India?
Key stakeholders in the REIT market in India include developers, investors, REIT managers, and regulatory bodies such as the mutual fund industry body Amfi. These stakeholders are expected to benefit from the reclassification of REITs as equity.
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