India’s Real Estate Investment Trust (REIT) market is steadily progressing from a “Nascent” to “Early Growth” stage, with close to 140 million sq ft of real estate assets including office and retail spaces already getting listed. According to Colliers’ latest report, “REITs Unlocked: Accelerating India’s Real Estate Maturity”, the four listed office REITs currently encompass close to 133 million sq ft of Grade A office space. Additionally, about 371 million sq ft of office assets, accounting for about 46% of the existing Grade A stock,can potentially come under future REITs. Amongst the top seven cities, Bengaluru accounts forthe bulk of additional REITable stock witha share of 24%, followed byHyderabad at 19%.Furthermore, existing REITs have around 34 million sq ft of under construction supply andthis is likely to become operational in the next 1-2 years. Overall,Indian REITs continue to pick pace, especially in the office sector, supported by new listings, broadening of occupier base and growing institutionalization in the segment.

Existing REIT/InvITportfolio in India

Source: Latest respective REIT/InvIT quarterly filings reports, DRHP (Knowledge Realty), Colliers

Note: Data is indicative of stock in Tier I cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune) only

India office REIT snapshot

Source: Colliers

Note: Data pertains to Grade A office buildingsand top 7 cities - Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune

Interestingly, at a micro market level, about 223 msf or 60% of the additiona lREITable office stock lie within Secondary Business Districts (SBDs) of the top seven cities in India. Amongst these SBDs, Bengaluruleads witha share of 36%, followed by Hyderabad at 29%. While the additional REITable stock is predominantly concentrated in SBDs and Peripheral Business Districts (PBDs) of major cities, about 14% of Grade A buildings in Central Business District (CBD) localities have the potential to be listed as future REITs.

Micro market profile of REITable stock

Source: Colliers

Note: Overall% share represents city share of REITable stock within the top seven cities; Share for CBD, SBD and PBD is for each respective city

CBD – Central Business District; SBD – Secondary Business District; PBD – Peripheral Business District |Data pertains to Grade A office buildings

Tenant quality drives occupancy levels and average rentals of properties under REITs

Mirroring the resilience of India’s commercial real estate sector, office REITs continue to demonstrate strong operational performance amid global uncertainties. With occupancy rates exceeding 86%, demand for premium office spaces remains robust. Steady rental income growth, underpinned by long-term leases and high tenant retention, further reinforces the credibility of REITs in the Indian office market.

Tenant profile of existing office REITs

Source: Latest respective REIT quarterly filings reports, DRHP (Knowledge Realty), Colliers

Note: Others include healthcare & pharma, etc

“Office REITs in India are at an early growth stage, with approximately 16% of Grade A stock already listed on the equity markets. An additional 371 million sq ft of officespacecan come under future REITs, much of which is concentrated in SBDsacross the top sevenmarkets. Rising demand from Global Capability Centers (GCCs) along with space uptake by technology & BFSI firms is driving occupancy levels.This in turn is expected to accelerate the growth of office REITs in India. For developers and investors, SBDs offer a significant opportunity to capitalize into these high-demand areas, unlocking value and driving long-term growth for their REIT portfolios,” says Badal Yagnik, Chief Executive Officer, Colliers India.

Also Read: Sebi Issues Warning to Investors as Strata Exits SM REIT Framework Amid Legal Row

REIT market in India still relatively smaller compared to other global markets

Globally, REITs across APAC, Europe & America have expanded into multiple assets such as office, retail malls, industrial warehouses, hospitals, residential apartments, data centers etc. Currently, Japan and Singapore are relatively established REIT markets in the APAC region with investors having access to a diverse set of underlying real estate assets. However, REITs/ Infrastructure Investment Trust (InvITs) market in India is relatively smallerin scale and havelisted office, retail and warehousing portfolios within the trusts. The regulatory environment in India is strong and REITs can ultimately expand to newer asset classes. Interestingly, SEBI has been championing the case for Small and Medium Real Estate Investment Trusts (SM-REITs) in recent years.

“The momentum of REITs in India is steadily gathering pace,fueled by rising investor confidence and growing focus on institutionalization of real estate. Diversification of REITs into different asset classes over the last few years and recent listingshave enhanced the participation of retail investors. Office REITs, in particular have performed well and currently have a market penetration of around 16%. With strong fundamentals in play, 25-30% of the overall office stock in India can potentially come under REITs by 2030."says Vimal Nadar, Senior Director & Head of Research, Colliers India.

Increasing diversificationand integration of ESG practices in Indian REITs

REITs in India are increasingly diversifying beyond office spaces, driven by a combination of investor demand for higher yields, the need for portfolio resilience, and evolving real estate dynamics. Going ahead, similar to mature markets REITs and InvITs in Indiacan potentially further expand into segments such as retail, warehousing, hospitality, and even data centers. Additionally, with a track-recordin mature markets, rental housing segments such as senior housing, co-living, student housing etc., canbecome futuristic REIT bets in India as well.

Currently, 86% of operational office portfolios under existing REITs are green-certified, reflecting strong alignment with international sustainability benchmarks. Over the next few years, Indian REITs are targeting green certification of their entire portfolios. They also aim to increase renewable energy usage by 30–35%. Overall, these measures reinforce their appeal to ESG-focused investors and can play a pivotal role in the next growth phase of Indian REITs.