India’s real estate investment trust market is set to enter a high-growth phase, with global private equity giant Blackstone predicting exponential expansion. With REITs currently making up less than one percent of the Indian stock market, compared to over fourteen percent in the United States, the potential for rapid scale-up is considerable.
Speaking on the future of REITs, Asheesh Mohta, Senior Managing Director of Blackstone Real Estate, pointed out that the structure remains heavily underutilized in India. He explained that REITs are still in their early stages domestically, and the market is gradually waking up to the advantages they offer. These instruments are becoming an attractive way to channel capital into rent-yielding real estate assets, with the added benefit of liquidity for investors through stock exchange listings.
Blackstone-backed Knowledge Realty Trust is currently leading the charge with an active IPO. The REIT, which owns properties in six major cities, has already garnered significant investor interest, with its IPO being over one point two times subscribed on the first day. What sets KRT apart is its near one hundred percent dividend payout, surpassing the ninety percent minimum mandated by SEBI, making it a strong option for those looking for stable and regular income.
Much like mutual funds, REITs pool money from a large number of investors. The pooled funds are used to invest in income-generating real estate assets, and the returns are shared in the form of dividends. Once listed, these trusts can be bought and sold on stock exchanges, providing flexibility and transparency to investors. According to Mohta, there is growing regulatory and institutional interest in REITs, including discussions around including pension funds and other long-term players in this space.
The government is also stepping up its efforts to widen access to real estate investments through regulatory innovation. In March 2024, SEBI introduced a new category called Small and Medium REITs, or SM REITs. Unlike traditional REITs which require a minimum asset size of five hundred crore rupees, SM REITs can be launched with assets as small as fifty crore rupees. This move opens the door for many smaller properties, especially in tier-two and tier-three cities, to be monetized through capital markets.
The upcoming pipeline in the REIT space is equally promising. Bagmane Group, a prominent real estate developer in Bangalore, is planning to launch a four thousand crore rupee REIT IPO. The process is already underway, with investment bankers currently engaged in discussions. DLF, India’s largest real estate company by market capitalization, is also exploring a potential REIT offering. If launched, it would add significant scale and visibility to the Indian REIT market.
Existing REITs like Embassy Office Parks, Brookfield India, Mindspace Business Parks, and Nexus Select Trust have already set strong examples of performance and investor trust. These REITs have diversified portfolios ranging from office complexes and retail malls to data centers and warehousing facilities. As more assets get institutionalized and rental income becomes more predictable, experts believe that REITs can become a critical part of long-term investment portfolios for Indian households.
Unlike equity markets that follow shorter business cycles, the real estate market operates on longer-term economic trends. This gives REITs a structural edge, as they align more closely with stable and predictable growth. With attractive yields, low volatility, and a steady cash flow model, REITs offer a compelling case for investors looking for diversification beyond traditional stocks and bonds.
As financial literacy spreads and more investors begin to look beyond FDs and mutual funds, the appeal of REITs is set to rise. Backed by global investors like Blackstone and supported by SEBI’s progressive regulatory stance, India’s REIT ecosystem is gearing up for a sustained phase of growth.
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