India's REIT Boom: How Rs 19.7 Lakh Crore Market Will Transform Real Estate

Private equity participation, rising from $500 million in 2011 to multi-billion-dollar highs by 2019, has enhanced transparency, deepened institutional confidence, and paved the way for REIT expansion across India’s thriving commercial real estate landscape.

As urbanisation, technology, and progressive policy reforms continue to reshape the sector, India’s commercial real estate stands poised to unlock the next wave of opportunity across asset classes, according to the report by Knight Frank India in collaboration with the Confederation of Indian Industry (CII).

Retail consumption across the organised formats is estimated at a value of Rs 8.8 lakh crore for FY 2025. Led by shopping centres (Rs 4.9 lakh crore), high streets (Rs 3.8 lakh crore), and other new-age formats such as airport and transit retail. This expansion reflects a clear shift toward experience-driven, consumer-centric destinations where shopping intersects with lifestyle and leisure, according to the report.

India’s office market stock surpasses 1 billion square feet, ranking as the fourth largest globally, it states.

India’s REITs have a potential to diversify beyond traditional asset classes like office, retail, and warehousing, to industrial parks, data centres, and hospitality. Listed REITs have delivered stable average annual dividend yield of about 5.5 per cent, making them attractive income-generating vehicles, the report states.

By 2030, India’s REIT market (including office, retail and warehousing sectors) is projected to reach Rs 19.7 lakh crore. India currently has five listed REITs covering about 177 million sq ft of commercial and retail space spanning operational, under-construction, and upcoming assets worth approximately Rs 2.3 lakh crore with over 290,000 unitholders.

"India’s commercial real estate (CRE) transformation is being led by businesses that are more global, technology-driven and experience-focused than ever before. Consolidation in office demand, resilient retail growth and the rapid expansion of digital infrastructure have fundamentally reshaped occupier behaviour," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

"Today, companies want efficient, green, future-ready spaces, and capital markets are rewarding that shift. As India heads toward a $7 trillion economy, CRE will play an essential role in powering productivity, attracting investment and building next-generation urban centres," he mentioned.

REIT investment allows individuals to buy shares in companies that own, operate, or finance income-producing real estate, similar to investing in mutual funds. Investors can earn money through dividends from rental income and potential capital appreciation, without the responsibilities of managing properties directly.

- IANS