Indian REITs Deliver 6–7.5% Yields, Outpacing US & Japan Markets: What It Means for Investors

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15 Sep, 2025

Indian REITs Deliver 6–7.5% Yields, Outpacing US & Japan Markets: What It Means for Investors

Introduction

Indian Real Estate Investment Trusts (REITs) are emerging as a compelling investment avenue, offering average yields between 6% and 7.5%, surpassing those in mature markets like the US (2.5–3.5%), Singapore (5–6%), and Japan (4.5–5.5%). This performance is highlighted in a recent report by Credai and Anarock, underscoring India's growing appeal in the global REIT landscape.

What Are Indian REITs?

REITs are investment vehicles that own or operate income-generating real estate, allowing investors to earn a share of the income produced without directly purchasing the properties. In India, there are currently five listed REITs:

Brookfield India Real Estate Trust
Embassy Office Parks REIT
Mindspace Business Parks REIT
Nexus Select Trust (focused on retail real estate)
Knowledge Realty Trust

These trusts predominantly invest in Grade A office spaces and retail malls, with a strong presence in cities like Bengaluru, Hyderabad, and Mumbai.

Why Are Indian REITs Attractive?

Higher Yields: The 6–7.5% yield range positions Indian REITs as attractive alternatives to traditional fixed-income instruments, offering both income and potential for capital appreciation.
Institutional Backing: Major institutional investors, including global entities, are increasingly participating in the Indian REIT market, enhancing liquidity and investor confidence.
Economic Growth: India's robust economic expansion, coupled with urbanization and infrastructure development, supports the demand for high-quality commercial and retail spaces.
Regulatory Support: The Securities and Exchange Board of India (SEBI) has introduced measures to facilitate REIT operations, such as classifying them as equity instruments, which may offer tax advantages and improve investor sentiment.

Global Comparison

Country	Average REIT Yield
India	6–7.5%
US	2.5–3.5%
Singapore	5–6%
Japan	4.5–5.5%

Despite India's higher yields, the report notes that the country lags in the diversification of REIT asset classes, with a predominant focus on office spaces. However, as urban infrastructure develops and investor appetite grows, there's potential for expansion into sectors like logistics, residential, and new-age commercial assets.

Future Outlook

The Indian REIT market is poised for significant growth:

Market Capitalization: Anticipated to reach ₹25,000 crore in the near term.
Asset Expansion: Ongoing developments and acquisitions are expected to increase the total leasable area under REITs.
New Listings: At least one new REIT is expected to list annually over the next 3–5 years, driven by strong leasing momentum and investor confidence.

Conclusion

Indian REITs are emerging as a robust investment avenue, offering competitive yields and supported by a growing economy and favorable regulatory environment. While there's potential for diversification into various asset classes, the current focus on office and retail spaces provides a solid foundation for investors seeking stable returns.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1: What factors contribute to the higher yields of Indian REITs?

Key factors include India's growing demand for Grade A office and retail spaces, urbanization trends, and institutional investor participation, all supported by favorable regulatory frameworks.

Q2: Are Indian REITs suitable for conservative investors?

Yes, with their stable income generation and potential for capital appreciation, Indian REITs can be an attractive option for conservative investors seeking regular returns.

Q3: How can I invest in Indian REITs?

Investors can purchase REIT units through the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) via a Demat account, similar to investing in stocks.

Q4: What are the risks associated with investing in REITs?

Risks include market volatility, interest rate fluctuations, and sector-specific challenges. However, diversification within the REIT portfolio can mitigate some of these risks.

Q5: How do Indian REITs compare to those in other countries?

While Indian REITs offer higher yields, they are less diversified compared to those in markets like the US and Singapore, which have broader asset class representations.