Despite a fluctuating market landscape, India’s listed Real Estate Investment Trusts (REITs) have delivered impressive returns and sustained robust office leasing activity. With leasing demand rising across major cities and regulatory support from SEBI, REITs have become pivotal in keeping momentum alive in the commercial real estate sector.
REITs Outpace Market Benchmarks
- Listed REITs have generated average returns of 18% over the past year, significantly outperforming the Nifty Realty index, which declined 15.5%.
- The broader Sensex remained largely flat over the same period.
- Factors driving REIT performance include steady office leasing and SEBI’s reclassification of REITs as equity instruments.
Leasing Growth in Top Office Markets
- Office leasing across India’s seven biggest markets totalled 50.9 million square feet through September 2025, marking an 8% year-on-year increase.
- Bengaluru leads with 14 million square feet leased, representing 27% of total demand.
- Pune and Chennai have already surpassed their entire 2024 leasing volumes within the first nine months.
REITs’ Expanding Influence in Premium Office Space
- REITs manage about 13% of India’s Grade A office stock, totalling over 105 million square feet.
- Portfolio growth has accelerated with a 12% year-on-year increase in owned space.
- New supply pipeline includes an additional 23 million square feet of office space under construction.
The FlexInsights Take:
REITs stand out as vital institutional anchors in India’s office leasing market, successfully attracting premium tenants and maintaining occupancy despite market shifts. Their returns outperform traditional real estate indices, reflecting the increasing maturity of India’s commercial real estate ecosystem. Bengaluru’s position as leasing leader underscores its strength in corporate and technology sectors, while Pune and Chennai’s robust leasing signal growing opportunities beyond primary markets. SEBI’s regulatory clarity surrounding REITs boosts investor confidence, supporting continued portfolio expansion and institutional interest. As India’s office market evolves, REITs will likely play an even greater role in shaping leasing dynamics and driving sector stability.
