SEBI Reclassifies REITs as Equity to Boost Property Investment
In a significant move to enhance investment in India’s property sector, SEBI has reclassified Real Estate Investment Trusts (REITs) as equity for mutual fund investments, aligning them with global practices.
SebiReitsEquityProperty InvestmentReal EstateReal EstateSep 15, 2025
Until now, REITs and Infrastructure Investment Trusts (InvITs) were grouped under the “hybrid” category due to their stable cash flows and lower liquidity. Treating REITs as equity brings them in line with global practices where they are part of equity indices. This is expected to attract greater institutional participation and retail interest.
Industry bodies have welcomed SEBI’s decision. The Indian REITs Association called it a significant milestone for the country’s real estate sector. Executives from major listed REITs, including Brookfield India Real Estate Trust, Embassy REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge REIT, said the move will help broaden the investor base, improve market liquidity, and draw more foreign and domestic capital.
Analysts noted that the reclassification will make it easier for REITs to be included in stock indices and held by mutual funds, thereby improving visibility and regulatory clarity. SEBI has, however, retained InvITs in the hybrid category for now, citing their relatively stable income structures and lower trading liquidity.
Currently, India has five listed REITs with combined assets under management (AUM) exceeding USD 2 billion. The segment is projected to expand significantly, potentially doubling to USD 4 billion by 2030, driven by rising demand for commercial and retail real estate.
Frequently Asked Questions
What is the significance of SEBI reclassifying REITs as equity?
Reclassifying REITs as equity aligns them with global practices and is expected to attract greater institutional and retail investment, improve market liquidity, and enhance visibility in stock indices.
How will this change benefit the real estate sector in India?
This change will broaden the investor base, improve market liquidity, and draw more foreign and domestic capital, potentially doubling the AUM of REITs to USD 4 billion by 2030.
Why were REITs previously classified as hybrid?
REITs were previously classified as hybrid due to their stable cash flows and lower liquidity, which are characteristics typical of hybrid investments.
What is the current status of InvITs in this reclassification?
SEBI has retained InvITs in the hybrid category for now, citing their relatively stable income structures and lower trading liquidity.
How many listed REITs are currently in India, and what is their combined AUM?
Currently, India has five listed REITs with a combined assets under management (AUM) exceeding USD 2 billion.
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