India's Real Estate Investment Trusts (REITs) have seen a notable increase in their performance and payouts in the financial year 2025 (FY25). According to recent data, India’s four publicly listed REITs — Brookfield India Real Estate Trust, Embassy Office Parks Reit, Mindspace Business Parks Reit, and Nexus Select Trust — collectively distributed Rs. 6,070 crore (US$ 709 million) to their unitholders, marking a 13% increase compared to the Rs. 5,366 crore (US$ 627.45 million) distributed in FY24.

This growth underscores the increasing investor confidence in India’s REIT market and reflects the strong leasing activity and robust revenue performance by these entities. In the fourth quarter of FY25 alone (Q4 FY25), the distribution to over 2.64 lakh unitholders reached Rs. 1,553 crore (US$ 181.6 million), up from Rs. 1,377 crore (US$ 161 million) in Q4 FY24.

Embassy Reit Leads the Pack

Among the four REITs, Embassy Reit stood out with the highest contribution. In Q4 FY25, it distributed Rs. 538 crore (US$ 62.9 million), and for the full fiscal year, it led again with Rs. 2,181 crore (US$ 255 million) in total payouts. This performance showcases Embassy Reit’s strong portfolio, tenant relationships, and operational capabilities.

REITs in India operate under the regulatory framework laid out by the Securities and Exchange Board of India (SEBI), which mandates that REITs must distribute at least 90% of their taxable income to investors. This rule ensures consistent and predictable income for unitholders and promotes transparency and accountability in the market.

Operating Income and Revenue Growth

Apart from distributions, India's REITs also reported strong financial growth metrics:

• Net Operating Income (NOI) for FY25 was Rs. 89,100 crore (US$ 10.42 billion), a 16% increase from Rs. 76,626 crore (US$ 8.96 billion) in FY24.

• Revenue from operations also saw a 16% year-on-year (YoY) increase, rising from Rs. 97,482 crore (US$ 11.40 billion) in FY24 to Rs. 1,12,000 crore (US$ 13.10 billion) in FY25.

These figures reflect the resilience of commercial real estate in India, especially in the Grade A office and retail space categories that dominate REIT portfolios.

Expanding Market Capital and Asset Base

India’s REIT market has matured significantly over the years. The total gross assets under management (AUM) now exceed Rs. 1,63,000 crore (US$ 19.06 billion). Additionally, the combined market capitalisation of the four listed REITs has crossed Rs. 98,000 crore (as of May 14, 2025). Together, they manage over 128.9 million square feet of Grade A commercial and retail real estate across major urban centres like Mumbai, Bengaluru, Hyderabad, NCR, Pune, and Chennai.

This vast real estate footprint gives Indian REITs diversified revenue streams from high-quality tenants, including multinational corporations, IT firms, and global retail brands.

Institutional Support and Industry Leadership

The Indian Reits Association (IRA) plays a crucial role in the industry's evolution. Backed by SEBI and the Ministry of Finance, IRA includes all four listed REITs as founding members. The body serves to promote industry standards, investor education, and regulatory advocacy.

Mr. Alok Aggarwal, Managing Director & CEO of Brookfield India Reit and the Chairman of IRA, attributed the strong performance of the sector to a combination of:

• Strong leasing activity in prime commercial locations

• Robust investor confidence

• Proactive policy support from regulators

He emphasized that as REITs continue to grow in size and scale, they will play a critical role in financing India’s urban infrastructure and commercial real estate development.

Key Trends Driving Growth in Indian REITs

Several macro and microeconomic trends have helped fuel the growth of REITs in India:

1. Urbanisation and Infrastructure Development: India's fast-paced urbanisation has increased the demand for Grade A office spaces and premium retail complexes, which are core assets for REITs.

2. Post-COVID Recovery: The return to physical offices in hybrid formats and strong hiring in sectors like IT, consulting, and finance have boosted demand for commercial properties.

3. Global Investment Flows: India remains a preferred destination for foreign institutional investors (FIIs) looking for stable and long-term returns, especially through REITs.

4. Retail Investor Participation: Better awareness, simplified processes, and strong yields have attracted retail investors to REITs listed on Indian exchanges like NSE and BSE.

5. Regulatory Clarity and Tax Benefits: SEBI’s guidelines and tax-efficient structures for REITs have made them attractive vehicles for investment compared to traditional real estate options.

REITs as an Investment Avenue

REITs have emerged as a viable alternative to direct investment in property. They offer:

• Liquidity: Units can be bought and sold on stock exchanges

• Diversification: Exposure to a portfolio of real estate assets

• Regular Income: Through quarterly or biannual distributions

• Professional Management: Properties are maintained by reputed developers and asset managers

These advantages make REITs suitable for institutional and retail investors alike, especially those looking for passive income and portfolio diversification.

Looking Ahead: The Future of REITs in India

As per industry analysts, India's REIT market is poised for continued growth in the coming years. Some of the future trends include:

• Inclusion of new asset classes like warehousing, data centres, and hospitality

• Expansion into Tier 2 cities where urbanisation is accelerating

• More listings and Initial Public Offerings (IPOs) of REITs to widen market participation

• Green buildings and sustainability initiatives in REIT portfolios

The success of existing REITs and their consistent returns are likely to attract more real estate developers to consider listing their assets under the REIT model.

Conclusion

The Rs. 6,070 crore distribution in FY25 by India’s four listed REITs is more than just a statistic — it is a testament to the strength and maturity of the REIT ecosystem in India. Backed by regulatory clarity, investor trust, and sound operational performance, REITs are transforming how Indian investors engage with the commercial real estate sector.

The Upcoming IPOs in this week and coming weeks are Victory Electric Vehicles International, Borana Weaves, Dar Credit and Capital,Belrise Industries, Wagons Learning.

The Current active IPO are Accretion Pharmaceuticals.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.