Indian REITs Deliver 6-7.5% Yield, Surpassing Many Global Markets.

Indian REITs Deliver 6-7.5% Yield, Surpassing Many Global Markets

Indian Real Estate Investment Trusts (REITs) are currently offering impressive average yields between 6% and 7.5%, outperforming many mature global REIT markets. According to recent joint reports by CREDAI and ANAROCK Capital, this yield range is significantly higher than those seen in mature markets such as the US, Singapore, and Japan. This growth highlights the rising importance and strength of the Indian REIT sector as an attractive investment avenue.

Market Growth and Capitalization

Since the first REIT listing in India in 2019, the sector has expanded rapidly to achieve a market capitalization close to $18 billion as of August 2025. With several new REIT listings expected in the next four years, analysts project the total market capitalization could surpass $25 billion by 2030. This growth trajectory reflects strong fundamentals and increasing institutional interest in India's commercial real estate space.

Yield Comparison With Global Markets

Indian REITs offer distribution yields averaging between 6% and 7.5%, which are notably higher than many global peers:

• United States REITs typically yield between 2.5% and 3.5%

• Singaporean REITs yield around 5% to 6%

• Japanese REITs yield approximately 4.5% to 5.5%

This superior yield performance positions Indian REITs as a favorable option, especially when coupled with potential capital appreciation and stable cash flow generation, attracting both domestic and international investors.

Sector Focus and Types of REITs

Indian REITs currently comprise office, retail, and industrial asset classes. The office REITs segment dominates with large-scale integrated business parks and grade A office spaces, serving multinational corporations and BFSI sectors. Retail REITs focus on high-quality shopping malls and retail real estate. Emerging segments include data center REITs and logistics-focused investors.

Types of REITs in India include:

• Equity REITs: Own and operate income-generating real estate assets.

• Mortgage REITs: Finance real estate owners by lending money secured against property.

• Hybrid REITs: Combine both equity and mortgage investments.

Benefits for Investors

Investing in Indian REITs offers multiple advantages:

• Attractive Yields: Higher than many global peers, delivering stable, regular income.

• Diversification: Exposure to institutional-grade commercial real estate without direct management.

• Liquidity: Traded on stock exchanges, providing better liquidity compared to direct real estate investment.

• Transparency and Regulation: Governed by SEBI regulations ensuring investor protection and clear disclosure norms.

Challenges and Considerations

Despite strong fundamentals, investors should be aware of associated risks:

• Tax Complexity: REIT dividends may face higher taxation compared to traditional dividends.

• Interest Rate Sensitivity: REIT valuations can be negatively impacted by rising interest rates.

• Market Volatility: Subject to market fluctuations and economic cycles impacting real estate.

• Capital Appreciation Limits: REITs typically distribute about 90% of earnings to investors, limiting reinvestment for growth.

Outlook for the Indian REIT Market

The Indian REIT market is on a promising growth path, with increasing interest from global institutional investors recognizing advantages in stable returns and diversification. The sector’s expansion is supported by regulatory enhancements, expansion of office and retail real estate, and rising acceptance of REITs as an asset class in India’s growing financial markets.