India’s real estate investment trust (REIT) market is poised for substantial growth, signaling a positive trajectory for the nation’s commercial real estate sector. A recent report by JLL projects a potential expansion of Rs 10.8 trillion (approximately $122-125 billion USD) over the next four years, driven primarily by opportunities in the office and retail segments across India’s top seven cities. This surge represents a significant vote of confidence in the Indian economy and its maturing investment landscape.
REIT Market in India: A Trillion-Rupee Milestone
The Indian REIT market has already achieved a remarkable feat, surpassing Rs 1 trillion in market capitalization in FY25. This milestone was reached within a mere six years of the first REIT listing, demonstrating rapid adoption and investor enthusiasm. To put this into perspective, the market capitalization has grown sixfold from Rs 26,400 crore in FY20 to Rs 1.6 trillion as of September 2025.
This growth isn’t just about numbers; it reflects a fundamental shift towards institutional investment in Indian real estate. Previously dominated by individual investors and developers, the sector is increasingly attracting large-scale capital from both domestic and international sources.
Expanding Portfolio Sizes and Occupancy Rates
The total space managed by listed REITs has experienced a dramatic increase since 2019, jumping from 33 million sq ft to 174 million sq ft across the five currently listed REITs. This expansion highlights the growing depth and sophistication of India’s commercial real estate market.
Crucially, occupancy rates within these office REITs remain exceptionally high, currently standing at an impressive 91%. This strong occupancy indicates robust demand for quality office space and the effective management of these REIT portfolios.
Drivers of Growth in the Indian REIT Sector
Several key factors are contributing to this anticipated boom in the REIT market. JLL’s Senior Managing Director & Head of Capital Markets, Lata Pillai, points to the sector’s “remarkable 40% CAGR trajectory over six years” as evidence of rising investor confidence. This confidence is further bolstered by the substantial untapped borrowing capacity held by the existing five REITs – a collective Rs 23,000 crore – allowing for significant portfolio expansion through strategic asset acquisitions.
Furthermore, the consistent Net Operating Income (NOI) growth across all listed REITs, even amidst global economic uncertainties, underscores the resilience and profitability of this investment avenue. Distribution yields have remained stable in the 6-7% range throughout FY25 and into the first half of FY26, offering attractive returns to investors.
Regulatory Changes and Market Access
A pivotal moment for the Indian REIT market came in September 2025 with the Securities and Exchange Board of India (SEBI) reclassifying REITs as equity instruments. This reclassification is expected to unlock significant new investment by enabling index inclusion and broadening participation from mutual funds.
Previously, regulatory hurdles limited the extent of mutual fund investment in REITs. This change removes those barriers, opening up a vast pool of capital and further accelerating market growth.
The Potential: Rs 10.8 Trillion by 2029
JLL’s Chief Economist, Dr. Samantak Das, estimates a potential five-fold expansion of the Indian REIT ecosystem over the next four years. This growth is underpinned by investment-grade office assets valued at $66-68 billion and retail opportunities worth $32-33 billion across the top seven Indian cities.
The office segment is projected to be the primary driver of this expansion, accounting for over 65% of the anticipated growth. This reflects the continued demand for modern, well-located office spaces, particularly in a post-pandemic world where businesses are re-evaluating their workspace needs. Commercial real estate is therefore a key focus for REIT investment.
The share of REITs in Grade A office stock has already seen a substantial increase, rising from 4.2% in 2019 to approximately 15% by June 2025. This demonstrates the increasing institutionalization of the office market and the growing influence of REITs.
Beyond Office and Retail: Diversification on the Horizon
While office and retail currently dominate the Indian REIT landscape, the report suggests that diversification into other asset classes is likely to occur. This could include logistics parks, data centers, and warehousing facilities, offering investors a broader range of options and potentially higher returns. The expansion of these alternative asset classes will contribute to a more resilient and accessible investment opportunities within the REIT ecosystem.
The current Gross Asset Value (GAV) of REITs stands at Rs 2.1 trillion, and the report emphasizes that the market is still in the early stages of a “multi-year growth cycle.” This cycle is being fueled by a confluence of factors: increasing institutional capital, progressive regulatory reforms, and a robust pipeline of assets ready for inclusion in REIT portfolios.
In conclusion, the Indian REIT market is experiencing a period of unprecedented growth and is poised for a significant expansion over the next four years. Driven by strong investor confidence, favorable regulatory changes, and a thriving commercial real estate sector, the potential for a Rs 10.8 trillion market by 2029 is well within reach. This presents a compelling opportunity for both domestic and international investors seeking exposure to India’s dynamic economy and its maturing real estate landscape. Keep a close watch on this evolving market as it continues to reshape the future of Indian real estate investment.
