India's nascent REITs market outclassing global peers with 6-7% yields

Despite REIT guidelines being introduced in 2014 and the first listing only in 2019, Indian REIT market accounts for just 20% of institutional real estate, far below the USA (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, but the risk-adjusted yields in India remain attractive 6-7%, according to the latest data. 

The limited penetration is largely because Indian REITs are so far concentrated in Grade A commercial office assets, which offer scale, transparency, and stable cash flows, but it shows there's a huge scope for improvement in the space. But there's huge room for growth. As more asset classes become REITable, India’s penetration could potentially rise to 25–30% of institutional real estate by 2030, according to the ‘Indian REITS: A Gateway to Institutional Real Estate’ report by ANAROCK Capital and CREDAI, unveiled at the CREDAI NATCON event in Singapore today.

The report analyses how growth in the REIT space could position India as one of the fastest-growing REIT markets globally. Shobhit Agarwal, CEO – ANAROCK Capital, says Indian REITs are late to the party, but now lead the dance. "Despite its late entry compared to global peers, India has strong fundamentals. The distribution yields, currently averaging at 6-7%, are well above many mature markets such as the US and Singapore, among others."

Out of the total REIT-worthy office stock of around 520 million sq. ft. in the top seven cities, just 32% or 166 million sq. ft. is currently listed, though the risk-adjusted yields here remain attractive, the report finds.

On residential REITs, the report says it remains a longer-term prospect, constrained by low rental yields and fragmented ownership. As the market matures, diversification is expected through data centres and logistics REITs, supported by rising digital demand and e-commerce growth, while retail mall REITs may follow with ongoing consolidation.

Data centre REITs, valued at $250 billion by 2024 and projected to double within seven years, are expanding. There's surging demand for cloud adoption, AI-driven workloads, and hyperscale infrastructure needs. India can capitalise on that and mirror the success recorded in industrial and logistics leasing space in H1 2025, which saw a 60% YoY surge, a 30% YoY rise in warehousing absorption, and a threefold surge in institutional money flowing into the ecosystem at $2.5 billion in 2024.

Over 60% of India’s REIT market value today rests with a very small set of players, with a strong base in Grade A offices linked to IT and BFSI, says Shekhar Patel, President, CREDAI. "The future, however, holds far wider promise. As India’s cities grow, infrastructure strengthens, and the economy diversifies, REITs will expand into retail, logistics, housing, and new-age assets. This will place India among the most dynamic REIT markets in the world."

When it comes to the regulatory environment, the CREDAI-ANAROCK report says there's a need to lower taxes on dividends from REITs, which will attract retail investors. "Developed markets like the USA and Singapore, dividends from REITs are generally taxed at lower rates, making them more attractive for retail investors compared to India."

Despite that, a 6-7% yield, coupled with rental escalations and capital appreciation opportunities, makes Indian REITs highly competitive compared to global peers. It will play a key role in shaping the future of Indian real estate, says the report, adding that as the sector diversifies into logistics, warehousing, retail, and data centres, India can position itself as a lucrative market for institutional capital.