India's ₹2.3 lakh cr Reit market overtakes Hong Kong; yields hold at 8-9%

Combined market cap hits Rs 1.66 Lakh Cr, now surpassing the Hong Kong Reit market despite only 32% of India's Reit-worthy stock listed

India’s Real Estate Investment Trust (Reit) market has officially entered the global big league. With a gross asset value (GAV) of ₹2.3 lakh crore and a listed market cap of ₹1.66 lakh crore, India’s Reit ecosystem is now larger than Hong Kong’s, despite only 32% of the country’s Reit-worthy commercial stock being publicly listed.

 

The findings, from ANAROCK Capital’s latest report India Reits – Taking a Stride, confirm that the sector—only six years old—is no longer an experiment. It is a structural powerhouse that has outpaced mature Asian peers in price performance, yields, occupancies, and sustainability scores.

 

Across five listed Reits—Embassy, Mindspace, Brookfield India, Nexus Select, and the 2025 entrant Knowledge Realty Trust—India’s Reit index has delivered a 5-year annualised price return of +8.9%, outperforming Singapore, Japan and Hong Kong Reit markets, many of which posted flat to negative returns over the same period.

 

"Since the first listing in 2019, the sector has expanded rapidly with Embassy, Mindspace, Brookfield India, Nexus, and now Knowledge Realty Trust — India’s largest office Reit by GAV and NOI. These platforms span Bengaluru, NCR, MMR, Hyderabad, Pune, Chennai, and key tier-II hubs, offering investors diversified exposure to India’s technology, BFSI, consulting, and retail corridors. Alongside, Reit distributions are tax efficient through a mix of dividend, interest and return of capital, with current distributions offering upwards of 65% tax-exempt income in the hands of unitholders," said Vishal Singh, MD - Investment Banking, ANAROCK Capital.

 

The mandatory distribution of at least 90% of net distributable cash flows has successfully transformed these trusts into efficient yield vehicles, democratizing access to Grade-A commercial real estate for HNIs and retail investors without the opacity or illiquidity of direct property ownership.

 

" "Since listing, unit prices for the initial four Reits have surged between 25% and 61%, while the newly listed Knowledge Reit has already gained approximately 12%. This capital appreciation is complemented by steady income generation, with trailing 12-month distribution yields holding firm in an attractive 5.1–6.0% band. In the second quarter of FY26 alone, the five Reits distributed over INR 2,331 crore — a massive ~70% year-on-year growth driven by occupancy upticks, new asset additions and listing of Knowledge Reit," said Shobhit Agarwal, CEO - ANAROCK Capital.

 

Crucially, Indian Reits indices have delivered a five-year annualised price return of roughly +8.9%, significantly outperforming peers in Singapore, Japan, and Hong Kong, many of which have languished with negative or low-single-digit returns during the same period.

 

Portfolios are running near optimal capacity with committed occupancies ranging from 90–96%. The sector accounted for over 20% of all pan-India gross office leasing in Q2 FY26, with Embassy and Knowledge alone leasing ~2.5 million sq ft, added the report

 

The GAV now spans:

 

• 176 million sq ft of Grade-A office + retail
• 2,000+ key hospitality platform
• High-quality assets across Bengaluru, Mumbai MMR, NCR, Pune, Hyderabad, Chennai and emerging Tier-II markets
• Distributions Jump 70% YoY: Yields Hold Strong at 5.1–6.0%
• The five Reits distributed ₹2,331 crore in Q2 FY26, marking a 70% YoY surge.
• Trailing 12-month yields continue to hold in the 5.1–6.0% range, providing investors with a stable, tax-efficient income instrument.
• More than 65% of all Reit distributions remain tax-exempt for investors due to Reits’ blend of dividends, interest, and capital return.
• Occupancy Near Full Capacity: 20–36% Re-Leasing Spreads

 

Committed occupancies range from 90% to 96%, among the highest globally.

Other strength indicators include:

 

• 20–36% re-leasing spreads, adding strong rental uplift
• 15–24% mark-to-market upside on in-place rents
• AAA credit ratings for all Reits
• Conservative leverage of 18–31%
• Low-cost debt at just 7.4–7.5%
• Long maturity profile (only 38% of debt due in next 4 years)

 

The sector also accounted for 20%+ of all India office leasing during Q2 FY26—embassy and Knowledge alone leased ~2.5 million sq ft.

 

Since listing:

 

Embassy, Mindspace, Brookfield India and Nexus Select have delivered 25–61% capital appreciation.

Knowledge Realty Trust has gained 12% since its August 2025 listing.

 

ESG: India’s Reits Among World’s Top Performers

 

All five listed Reits now have:

 

• 5-Star GRESB ratings, scoring in the low-to-mid 90s
• 38–74% green energy usage
• Net-zero commitments between 2030 and early 2040s

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SEBI Reclassification Sparks 2026 Wave: Index Inclusion Coming

 

A transformational regulatory shift takes effect on January 1, 2026:

 

SEBI will classify Reits as ‘equity-related instruments.’

 

This will:

• Move Reits from debt/hybrid buckets into mainstream equity allocations
• Enable index inclusion from mid-2026
• Permit higher mutual fund and PMS allocations
• Deepen domestic investor participation
• Reduce volatility through increased liquidity

 

This move alone could push India’s Reit market toward a $20 billion (₹1.7 lakh crore) market cap in the near term. 

 

"With SEBI’s pivotal reclassification taking effect in January, these trusts are poised to graduate from high-yield alternatives to essential equity portfolio staples," said Vishal Singh.

 "Fuelled by impending index inclusion and deepening domestic participation, the sector is on track to breach a $20 billion market cap in the near term."