SEBI Approves Equity Status for REITs to Boost Investor Participation
The Securities and Exchange Board of India (SEBI) has approved the classification of Real Estate Investment Trusts (REITs) as equity, a move aimed at broadening investor participation and enhancing liquidity.
ReitsSebiEquityInvestor ParticipationReal EstateReal Estate NewsSep 12, 2025
The Board approved the amendments to SEBI (Mutual Funds) Regulations, 1996, reclassifying REITs as ‘equity’ and retaining the ‘hybrid’ classification for InvITs. SEBI stated, “The re-classification was proposed, inter-alia considering the characteristics of REITs, which are more inclined towards equity, relatively more liquid, and to ensure alignment with global practices. InvITs, on the other hand, being products primarily privately placed with more stable cash flows and having lesser liquidity, the hybrid classification was proposed to be retained.”
This move is expected to promote ease of doing business by enabling InvITs and REITs to attract capital from more investors under the Strategic Investor category. Earlier, REITs and InvITs were categorized as hybrid funds because they blend characteristics of both equity and debt investments, offering a unique combination of income generation and potential capital appreciation.
REITs are investment vehicles that own, operate, and manage a portfolio of income-generating properties for regular returns. Small investors can buy units of REITs from both primary and secondary markets just as they buy shares or mutual funds. The Indian REITs Association (IRA) has welcomed SEBI’s progressive move to classify REITs as equity for the purpose of inclusion in market indices.
“This important step marks a significant milestone in strengthening the REIT ecosystem in India and aligns with global best practices where REITs are part of equity indices. This decision is a step forward that will contribute to enhancing the depth of the REIT market and accelerating the growth of these instruments in India. By enabling this, SEBI has paved the way for widening investor participation in these instruments and also improving liquidity,” the IRA said.
Similar to the reduction in lot size, which SEBI enabled in July 2021, this reform shall also help foster greater market participation and position India as a progressive investment destination for institutional investment in yielding assets. IRA also welcomes SEBI’s move to expand the scope of “strategic investor” for Real Estate Investment Trusts (REITs) to facilitate wider investor participation.
Amit Shetty, CEO of Embassy REIT, said, “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.”
A report released by Credai and Anarock at the CREDAI Natcon 2025 in Singapore said on September 12 that the REIT market in India has grown steadily since its first listing in 2019, reaching a market capitalization of about $18 billion as of August 2025. With three more REITs expected over the next few years, India is projected to surpass $25 billion in market capitalization by 2030.
Frequently Asked Questions
What is the significance of SEBI classifying REITs as equity?
Classifying REITs as equity is significant because it aligns with global best practices, enhances liquidity, and broadens investor participation. It also paves the way for REITs to be included in market indices.
What are REITs?
REITs, or Real Estate Investment Trusts, are investment vehicles that own, operate, and manage a portfolio of income-generating properties. They provide regular returns to investors and are accessible through both primary and secondary markets.
Why are InvITs classified as hybrid?
InvITs, or Infrastructure Investment Trusts, are classified as hybrid because they combine characteristics of both equity and debt investments. They are primarily privately placed with stable cash flows and have lesser liquidity compared to REITs.
How will this decision affect the REIT market in India?
This decision is expected to enhance the depth of the REIT market, accelerate its growth, and attract more investors. It will also improve liquidity and position India as a progressive investment destination.
What is the current market capitalization of the REIT market in India?
As of August 2025, the REIT market in India has a market capitalization of about $18 billion. It is projected to surpass $25 billion by 2030 with the expected addition of more REITs.
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