Sebi Reclassifies REITs as Equity: A Boost for Mutual Fund Investments
The Securities and Exchange Board of India (Sebi) has reclassified Real Estate Investment Trusts (REITs) as equity, paving the way for higher mutual fund participation. This move is expected to enhance investment and liquidity in the REIT market.
SebiReitsEquityMutual FundsInvitsReal Estate NewsSep 12, 2025
The reclassification of REITs as equity was proposed due to their characteristics, which align more closely with equity instruments and are relatively more liquid. This move aligns with global best practices, making REITs more attractive to investors. On the other hand, InvITs, which are primarily privately placed and have more stable cash flows with lesser liquidity, will retain their hybrid classification.
The reclassification of REITs as equity means that mutual fund investments in these instruments will now be considered within the investment allocation limit for equity. This change will also make REITs eligible for inclusion in equity indices, enhancing their visibility and appeal to a broader range of investors. According to Sebi, this decision will facilitate enhanced investment by mutual fund schemes in REITs.
Moreover, the existing investment limit applicable for both REITs and InvITs will now be exclusively available for InvITs. This adjustment is expected to foster growth in the InvIT segment as well, creating a more balanced and dynamic market.
The decision follows feedback received during a public consultation in April 2025 and subsequent deliberations with the Mutual Fund Advisory Committee (MFAC), concerned industry associations, and stakeholders. The Indian REITs Association has welcomed this move, calling it a 'progressive step' that strengthens the REIT ecosystem in India. They noted that this decision aligns with global best practices, where REITs are part of equity indices, and will contribute to enhancing the depth of the REIT market and accelerating the growth of these instruments in India.
By enabling this reclassification, Sebi has paved the way for wider investor participation in REITs, improving liquidity and overall market depth. This move is expected to have a positive impact on the Indian real estate and investment landscape, making it more robust and attractive for both domestic and international investors.
Frequently Asked Questions
What is the significance of Sebi reclassifying REITs as equity?
Reclassifying REITs as equity means that mutual fund investments in REITs will be considered within the investment allocation limit for equity. This will make REITs eligible for inclusion in equity indices, enhancing their visibility and appeal to a broader range of investors.
How will this reclassification affect mutual fund investments?
The reclassification will facilitate enhanced investment by mutual fund schemes in REITs, making these instruments more accessible and attractive to mutual fund investors.
Why did Sebi retain the hybrid classification for InvITs?
Sebi retained the hybrid classification for InvITs because they are primarily privately placed, have more stable cash flows, and exhibit lesser liquidity. This classification aligns with the unique characteristics of InvITs.
What is the impact of this decision on the REIT market?
This decision is expected to enhance the depth of the REIT market and accelerate the growth of REIT instruments in India. It will also improve liquidity and widen investor participation in REITs.
How did the Indian REITs Association respond to this decision?
The Indian REITs Association welcomed the decision, calling it a 'progressive step' that strengthens the REIT ecosystem in India and aligns with global best practices.
Related News Articles
Pune's PCNTDA Residents to Get Freehold Status, Promises Maharashtra Minister Uday Samant
Maharashtra Minister Uday Samant has assured PCNTDA residents that a decision will be made on freehold status without causing financial loss to the state government.
Veriff Boosts Biometric Security to Combat Account Takeover Fraud
Biometric authentication, account takeover fraud, identity verification, facial recognition, fraud prevention
Inside Mumbai's Luxurious Abodes: A Glimpse into the Homes of India's Elite
Mumbai, often dubbed the 'Billionaire Capital of Asia,' boasts a real estate landscape that mirrors its status as India's commercial and financial hub. From opulent mansions to sleek high-rises, the city is home to some of the most stunning and expensive
Kapil Sharma: From Rs 500 Salary to Rs 300 Crore Net Worth
Kapil Sharma, the king of Indian comedy, has come a long way from his humble beginnings. Today, he owns luxurious properties and cars, and his net worth is estimated at Rs 300 crore. Explore his inspiring journey from rags to riches.
Mumbai and Delhi Emerge as Leading Luxury Real Estate Markets in Asia-Pacific
India's real estate sector is witnessing a significant boom, driven by robust economic growth, infrastructure improvements, and changing lifestyle trends. Mumbai and Delhi, in particular, are ranking among the fastest-growing luxury real estate markets in
Important Steps to Ensure Your Apartment is Free from Legal Issues Before Purchase
MahaRERA has recently directed a real estate developer near Mumbai to disclose details about any pending litigation to the public. This highlights the importance of checking for legal issues before buying an apartment.