SEBI’s Equity Tag for REITs: A Game-Changer for India's Real Estate Market
India’s Real Estate Investment Trust (REIT) market, currently valued at just under $20 billion, has the potential to double in the coming years, thanks to SEBI’s decision to reclassify REITs as equity. Industry leaders are optimistic about the future of this sector.
ReitsSebiEquity ClassificationReal EstateInvestor ReturnsReal EstateSep 18, 2025
“Today we are probably just shy of $20 billion. We think that number has the potential to meaningfully go up. Can it double from what it is today? I’m hoping so in the not-too-distant future,” Sundareswaran told CNBC-TV18.
The optimism is fueled by the Securities and Exchange Board of India (SEBI)’s decision to reclassify REITs as equity. This move, described by both Sundareswaran and Ramesh Nair, MD & CEO of Mindspace REIT, as long overdue, is expected to have a profound impact on the sector.
“This was always intended to be an equity product. Obviously, SEBI wanted to give it some time before that classification came through. The impact is not just on the flows; ultimately, this is an equity product, and this is where it should be categorised,” Sundareswaran explained.
Nair called the reclassification “a big step from the government’s point of view, and very positive for our sector.” He pointed out that the equity classification will allow more index funds, exchange-traded funds (ETFs), and passive funds to consider REITs. Since the announcement, listed REITs have already seen significant gains.
Investor returns have been robust, with Mindspace REIT delivering a 36% total return in the past year, a 27% annualised return over two years, and 15.8% since listing five years ago. “In a world with so much volatility and worry, a 36% return over the last year is fantastic,” Nair said, emphasizing the need for greater awareness. The number of investors has grown from a few thousand in 2019 to about 3 lakh today, with mutual funds investing close to ₹30,000 crore and insurance companies around ₹10,000 crore.
Nair also highlighted the advantages of REITs compared to direct real estate ownership: “You get dividends on a quarterly basis, it’s an inflation hedge, professionally managed, highly transparent and compliant, and most importantly, it has delivered strong returns.”
Despite global uncertainty around tariffs, demand for commercial real estate in India remains strong. Net leasing has risen 28% in the past six months and gross leasing 18%. “Every quarter, every IPC report shows record leasing. Over the last seven to eight quarters, we’ve been seeing that,” Nair noted.
Both leaders agreed that REITs have shown resilience since their introduction in India. “Since the first REIT got listed five to six years ago, despite Covid and other challenges, REITs have been resilient and continued to deliver returns,” Sundareswaran said.
The reclassification of REITs as equity by SEBI is a significant step that could catalyze further growth and investor interest in this sector. With strong returns and a robust market, the future of India’s REIT market looks promising.
Frequently Asked Questions
What is a Real Estate Investment Trust (REIT)?
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate. REITs allow individuals to invest in large-scale, income-producing real estate without having to purchase and manage physical properties.
Why is SEBI reclassifying REITs as equity?
SEBI is reclassifying REITs as equity to align them with their intended nature as investment vehicles. This move is expected to attract more institutional and retail investors, as well as allow REITs to be included in equity indices and ETFs.
What are the benefits of investing in REITs?
Investing in REITs offers several benefits, including regular dividend income, professional management, transparency, and the potential for strong returns. REITs also provide a way to diversify investment portfolios and act as an inflation hedge.
How has the REIT market performed in India?
The Indian REIT market has performed well, with significant returns and growing investor interest. Mindspace REIT, for example, has delivered a 36% total return in the past year and a 27% annualised return over two years.
What is the potential for growth in India's REIT market?
Industry leaders are optimistic about the growth potential of India's REIT market. With SEBI’s reclassification of REITs as equity, the market is expected to double in size from its current valuation of just under $20 billion.
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