The Indian REITs Association (IRA) said on Friday that it welcomes the Securities Exchange Board of India’s (Sebi) decision to classify Real Estate Investment Trusts (REITs) as equity so that they can be included in the market indices.

“This important 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,” the IRA said in a statement. It added that Sebi’s decision will contribute to augmenting the depth of the REIT market in India, along with boosting the growth of these investments. “By enabling this, Sebi has paved the way for widening investor participation in these instruments and improving liquidity.”

Comparing the reform to reduce the lot size—which was enabled by Sebi in 2021—the IRA said that the reform will help enable greater market participation. The reform will also position India as a “progressive investment destination for institutional investment in yielding assets.”

The IRA has also welcomed the capital market regulator’s decision to increase the scope “strategic investor” for REITs, which it believes will enable a greater participation from investors. It also expressed hope that the stock exchanges will make the required amendments in the eligibility criteria of indices to enable REITs to be part of the eligible ones.

“We welcome and commend Sebi’s landmark move to classify REITs as equity instruments. At Embassy REIT, 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,” Amit Shetty, CEO, Embassy REIT, said in a statement.

Earlier, the Sebi board approved the classification of REITs as equity while retaining the hybrid status for Infrastructure Investment Trusts (InvITs). The Indian REIT market accounts for just 20% of institutional real estate, far below the U.S. (96%) or even Asian peers like Singapore (55%) and Japan (51%), even as the country’s REIT market has hit $18 billion as of August 2025 since the first listing in 2019.

It also lags behind mature markets like the U.S., Singapore, and Japan in diversification; however, the risk-adjusted yields in India remain attractive at 6–7%, according to data published this month.