The Securities and Exchange Board of India (SEBI) has announced a significant regulatory shift, classifying Real Estate Investment Trusts (REITs) as equity in mutual fund and specialized investment fund portfolios. The decision is likely to fuel market participation, boost liquidity, and bring India’s REIT framework in line with global standards.
With this positive move, units of India’s five listed REITs have also surged as much as 8% in the last two sessions. Mindspace Business Parks REIT climbed 5.6% in two days to Rs 446.89 per unit, bringing its market value to Rs 27,114.76 million. Nexus Select Trust rose 7.6% to Rs 157.70, valuing the REIT at Rs 23,785.50 crore.
On the other hand, Embassy Office Parks gained 3.8% to Rs 413.99, with a market capitalization of Rs 39,199.20 crore. Brookfield India Real Estate Trust rose 5.6% to Rs 338.00, bringing its valuation to Rs 21,440.35 crore. Lastly, Knowledge Realty Trust climbed 4.1% to Rs 112.35, putting its market capitalization at Rs 21,440.35 crore.
Earlier, REITs and Infrastructure Investment Trusts (InvITs) were classified as hybrids since they combine loan and equity aspects. SEBI’s board has decided to hold onto the hybrid status for InvITs while moving REITs to the equity bracket, citing liquidity, market behavior, and alignment with international standards.
This will help in promoting ease of doing business by enabling InvITs and REITs to attract capital from more and more investors across the world under the Strategic Investor category. In July 2021, SEBI came up with another reform which reduced lot sizes for REITs to encourage retail participation. This continuous approach of improving liquidity and fostering greater market participation by the SEBI will strengthen India’s position as a progressive nation for institutional investments in yield-generating assets.
According to the joint research report by CREDAI and ANAROCK, India’s REIT market has grown exponentially since its inception in 2019, reaching a market capitalization of $18 billion as of August 2025. Notably, with three more REITs likely to launch in the upcoming years, this sector is expected to cross the $25 billion benchmark by 2030.
How Industry Takes This Decision?
The Indian REITs Association (IRA) hailed the move, describing it as a “milestone” for the sector. The body also stated that the reform would increase market depth and promote the growth of REIT instruments across the country.
Several market experts also believe that the reform will probably make India’s REIT ecosystem stronger by giving domestic mutual funds a chance to invest more meaningfully in the asset class, like they do in other developed markets around the world.
What investors should know after this reform in REITs market?
This reclassification will not change the basic risk reward profile of REITs. They will continue to provide consistent yields with moderate growth while being sensitive to interest rate changes and real estate cycles. What it will do is make current REIT units easier to trade, which could lead to better capital appreciation and less volatility over time.
For those who are still not familiar with the concept, REITs are investment vehicles that hold or operate income generating real estate assets, allowing investors to get a portion of the income without actually acquiring the property.
