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SEBI has reclassified Real Estate Investment Trusts as equity for mutual fund and specialized fund investments, while retaining InvITs under the hybrid category. The move is intended to boost liquidity, simplify fund flows, and align Indian REIT regulations with international norms. Industry associations and listed REITs such as Brookfield India, Embassy, Mindspace, and Knowledge Realty Trust have welcomed the decision, highlighting that it will expand investor participation and encourage more listings. India currently has five listed REITs, which together have distributed more than INR 24,300 crore to unitholders and are offering yields of 6-7.5 per cent.
The Securities and Exchange Board of India (SEBI) has reclassified Real Estate Investment Trusts (REITs) as equity for the purpose of investments made by mutual funds and specialized investment funds. This change, approved by the SEBI board last week, is aimed at encouraging more investment in REITs while Infrastructure Investment Trusts (InvITs) will continue to be treated as "hybrid" assets. Advertisement
The Indian REITs Association (IRA) and leading listed REITs Knowledge Realty Trust, Mindspace REIT, Embassy REIT and Brookfield India Real Estate Trust have welcomed the move. According to them, the reclassification will widen investor participation, deepen liquidity, and support the growth of India's real estate investment market. They also believe it will help bring more REIT listings in the coming years.
REITs are vehicles that hold or operate income-producing real estate, giving investors a way to earn income from such properties without directly owning them. Industry officials noted that the new rules bring regulatory clarity, simplify fund flows, and align Indian regulations with global practices where REITs are part of equity indices.
India currently has five listed REITs: Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust and Knowledge Realty Trust. Market participants expect the inclusion of REITs in equity benchmarks following this change, which may attract more domestic and foreign capital into yield-generating assets.
SEBI regulations require REITs to distribute at least 90 per cent of their net distributable cash flows to unitholders. Till the first quarter of the current financial year, the four major REITs have together distributed over INR 24,300 crore to unitholders. According to a recent study released by CREDAI and Anarock, Indian REITs are currently delivering yields in the range of 6 to 7.5 per cent, higher than what is seen in several mature markets, including the US.
The first REIT in India was listed in 2019, and since then, the market has gradually expanded. The overall assets under management of REITs in the country have already crossed USD 2 billion and are expected to touch USD 4 billion by 2030. Industry leaders say this regulatory development should further strengthen the long-term outlook of REITs in India.
Source PTI
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