The growing popularity of Real Estate Investment Trusts (REITs) and the emergence of Small and Medium REITs (SM REITs) are transforming India's real estate sector. As domestic investors increasingly view real estate as a core portfolio allocation, the sector is poised for significant change over the next 3-5 years.
According to Sandipan Roy, Chief Investment Officer at Motilal Oswal Private Wealth, Indian real estate is undergoing a structural re-pricing, with domestic investors treating it as a foundational portfolio allocation. This shift is driven by the rise of domestic investment platforms and enhanced market access through REITs and SM REITs. Institutional capital is moving away from rigid debt structures and increasingly evaluating pure land funding and growth equity.
The rollout of SM REITs alongside established REIT platforms is enabling fractional ownership in commercial real estate, changing how capital flows into India's infrastructure. These platforms are unlocking retail and HNI wealth, expanding beyond primary metros, and transforming peripheral micro-markets into institutional-grade hubs.
“Indian real estate is undergoing a permanent structural re-pricing.”
Sandipan Roy, Chief Investment Officer at Motilal Oswal Private Wealth
REITs have transitioned from a niche investment concept into a mainstream asset class. Since their debut in 2019, retail participation has skyrocketed, with over 4.2 lakh investors. India's REIT ecosystem is poised for further growth, driven by regulatory reforms and attractive yields of 6–7%.
The Indian real estate landscape is evolving into a multi-asset ecosystem. Beyond traditional commercial offices, segments like data centres, logistics, warehousing, retail, healthcare, and hospitality are attracting institutional interest. The demand for commercial real estate remains strong, driven by technology and manufacturing firms seeking premium spaces.
The sector is also witnessing growth in residential upscale and industrial formalization. The industrial and warehousing segment is expanding into Tier-II and Tier-III cities, catalyzed by Grade-A hubs and the expansion of electric vehicle manufacturing.
Background
Since the introduction of REIT regulations by SEBI in 2014, the Indian real estate sector has seen significant changes. Progressive reforms, including reduced lot sizes and tax exemptions, have strengthened transparency and retail participation.
The Indian REIT ecosystem is no longer a proof-of-concept; it is a structural megatrend. With regulatory clarity and a massive unlisted asset pipeline, REITs will play a defining role in shaping the future of Indian wealth creation. Investors should watch for sectoral diversification and new frontiers like data centres and healthcare.
