Markets regulator Securities and Exchange Board of India’s (SEBI)‘ decision to classify Real Estate Investment Trusts (REITs) as “equity” for investments by mutual funds is a progressive step that will widen investors’ participation and strengthen this instrument.
To enhance investment by Mutual fund schemes in REITs, the SEBI Board last week approved the amendments to SEBI (Mutual Funds) Regulations, 1996, for re-classifying REITs as “equity” and retaining the “hybrid” classification for the InvITs, for the purpose of investments by Mutual Funds and Specialised Investment Funds.
Indian REITs Association (IRA), as well as top officials of listed REIT entities, Sattva-Blackstone sponsored Knowledge Realty Trust, K. Raheja-sponsored Mindspace REIT, Embassy REIT and Brookfield India Real Estate Trust, hailed the decision, saying this will boost overall investment in the real estate sector and also lead to listing of more REITs in India.
REITs are investment vehicles that own or operate income-generating real estate, enabling investors to earn a share of the income produced without directly purchasing the properties.
Welcoming the decision, the IRA said this important and progressive step marks a significant milestone in strengthening the REIT ecosystem in India and aligns with global best practices where REITs are part of equity indices.
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“This decision is a step forward that will contribute to enhancing the depth of the REIT market and accelerating the growth of these instruments in India,” it added. The association noted that this decision would widen investor participation in REITs.
At present, there are five listed REITs in India — Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust and Knowledge Realty Trust.
Listing out possible benefits of the SEBI decision, Shirish Godbole, CEO of Knowledge Realty Trust, said this is a progressive step that will unlock deeper pools of capital for India’s real estate sectors.
“This long-awaited move brings regulatory clarity, simplifies fund flows, and aligns India with global practices, making Real Estate far more attractive to both domestic and international investors,” Mr. Godbole added.
Sharing his perspective, Ramesh Nair, MD and CEO of Mindspace REIT, said, this reform will enhance liquidity, broaden investor participation, and strengthen the depth of the REIT market.
“The move, along with the expansion of the definition of strategic investors, will accelerate the next phase of growth for REITs and reinforce India’s positioning as an attractive destination for institutional capital in yield-generating assets,” Mr. Nair observed.
In India, the first REIT got listed in 2019. At present, the total assets under management have crossed $2 billion, and the figure is expected to reach $4 billion by 2030.
Alok Aggarwal, MD & CEO of Brookfield India Real Estate Trust, said this regulatory development would bolster the growth trajectory of India’s REIT market by enhancing market liquidity and deepening investor participation.
“We expect this move to facilitate inclusion of Indian REITs in benchmark indices, which should bring in more investors and deepen the attractiveness of this product to broader capital markets,” he added.
Amit Shetty, CEO of Embassy REIT said, “We see this as a catalyst to broaden investor participation, enhance liquidity, enable future index inclusion, and further strengthen REITs as a mainstream investment asset class.” As per the SEBI regulation, REITs are required to distribute at least 90% of their net distributable cash flows to unitholders.
On distribution to unitholders, the IRA said that four REITs have cumulatively distributed more than ₹24,300 crore to unitholders till Q1 FY26.
Last week, realtors’ apex body CREDAI and property consultant Anarock released a report at an event in Singapore, highlighting that Indian REITs are generating an average yield of 6% to 7.5% for unitholders, better than many mature markets, including the U.S.
Published – September 15, 2025 11:58 am IST