Retail demand, domestic capital, strong regulation driving India's REIT market to new highs: Blackstone's Vikram Garg

India's real estate investment trust (REIT) space is evolving at a much faster pace, with five large REITs dominating the space. From a nascent space to one dominated by the likes of Blackstone and Omers, the REIT segment within the real estate industry is seeing a major shift.

Speaking about India's evolution in the REIT space, Vikram Garg, Senior MD, Head of Asia Real Estate Asset Management at The Blackstone Group, said when they launched their first REIT in India, with a partnership with Embassy group, Embassy Office Parks REIT, there were 7,000 retail applications, and this time around, for Knowledge Realty Trust (KRT) REIT, there were 170,000, which shows the strength of the India market.

"We think there's still tons of potential. The regulator has played a great role in getting to where we are. We've started the small and medium (SM) REITs. As a retail investor, getting a 6-7% dividend yield and with growth potential, from rent escalation from growth, if you can get a 30-40% total return, that is very interesting for a lot of retail investors and institutional investors," Garg said at a panel discussion on 'REITs, Financial Innovation & the Evolution of Real Estate Finance' at CREDAI NATCON event.

Other experts, including Alessandro Fiascaris, Head of Asia Pacific, Oxford Properties Group, and Sarah Winbur, Senior Portfolio Manager, APG Asset Management (Singapore), agreed that, unlike in the past, India now offers much of the domestic capital. They said The Blackstone Group listed their first REIT, it was about 80% foreign capital and now the one that they listed last three weeks ago, KRT REIT, received 90-95% domestic capital.

Notably, Blackstone-backed office platform, KRT REIT, created a record for being India’s REIT as it raised Rs 4,800 crore public issue, which was 13 times oversubscribed.

However, despite REIT guidelines being introduced in 2014 and the first listing only in 2019, the Indian REIT market still accounts for just 20% of institutional real estate, which is far below the USA (96%) or even Asian peers like Singapore (55%) and Japan (51%).

Alessandro Fiascaris of Oxford Properties Group, speaking on India reaching the mainstream for institutional capital, says India has definitely reached the mainstream, but there's still a long way. "There are a lot of institutional investors who are completely absent in India. I believe there is a long way to go. If you look at European investors, they have very little exposure. The rest of Asia is just opening up. So to me, we are in the very, very beginning of a long run."

He also talked about a blind spot in Singapore's model that India should avoid repeating, saying some REITs are subscale and small, creating a vicious cycle. "To this day, India’s REITs are relatively large, which gives enough liquidity and allows them to grow. I really encourage India to pursue this kind of large REIT route. Subscale REITs are not the way to go forward and will have a negative impact," he asserted.

Winbur of APG Asset Management, speaking on APG's interest in investing beyond Tier 1 India, said there is a preference for the company to invest in Tier 1, but points out that the company can invest in any city globally. "We have invested in tier two and tier three cities, for example, our exposure in Lemon Tree and invested in a mall in Amritsar. It just depends, again, in terms of where that scale is, and it comes back to where the liquidity is. There is an appetite for tier 2, tier 3 cities as long as they scale."

India's REIT market has hit $18 billion as of August 2025 since the first listing in 2019, delivering the risk-adjusted yields at 6-7%, according to a latest report by ANAROCK Capital and CREDAI, which was released at the NATCON event in Singapore. The report finds a huge potential in the space, stating that 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.

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. However, experts agree that 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.