IRA Welcomes SEBI’s Move to Classify REITs as Equity for Index Inclusion Breakthrough

The Indian REITs Association (IRA) has praised SEBI’s decision to classify Real Estate Investment Trusts (REITs) as equity for inclusion in market indices, marking a significant milestone in strengthening the REIT ecosystem in India. The reform will deepen the REIT market, improve liquidity, and expand investor participation, and broaden the scope of “Strategic Investor.” The Indian REITs Association (IRA) has lauded the Securities and Exchange Board of India (SEBI) for its recent decision to classify Real Estate Investment Trusts (REITs) as equity instruments. This move marks a significant milestone in aligning India’s REIT ecosystem with global best practices, where REITs are typically.

Included in equity indices The reclassification is expected to deepen the REIT market, improve liquidity, and expand investor participation, thereby strengthening the overall investment landscape in India Previously, REITs and Infrastructure Investment Trusts (Invites) were categorized as hybrid instruments due to their blend of debt and equity features. However, SEBI’s decision to classify REITs as equity reflects their higher liquidity and closer alignment with equity-like characteristics. This strategic move is anticipated to enhance the attractiveness of REITs to mutual funds and other institutional investors, thereby broadening the investor base and increasing capital inflows into the sector.

The IRA has welcomed this progressive step, emphasizing that it will contribute to enhancing the depth of the REIT market and accelerating the growth of these instruments in India. By enabling REITs to be included in equity indices, SEBI has paved the way for wider investor participation and improved liquidity. This decision builds upon earlier initiatives, such as SEBI’s 2021 reduction in lot size, which further enhanced India’s position as a progressive investment destination for institutional capital in yielding assets In addition to reclassifying REITs, SEBI has also expanded the scope of the “Strategic Investor” category for REITs. This move is expected to facilitate wider investor.

Engagement and attract a diverse range of institutional investors, including foreign investors and qualified institutional buyers. By broadening the definition of strategic investors, SEBI aims to unlock deeper pools of capital for the real estate sector, thereby fostering growth and development in the industry. (SEBI) Industry experts anticipate that SEBI’s decision will unlock significant capital for India’s real estate sector. Shirish Godbole, CEO of Knowledge Realty Trust, India’s largest and most recent REIT, expressed confidence that the move would unlock deeper pools of capital for the sector. Similarly, Amit Shetty, CEO of Embassy REIT, India’s first publicly listed REIT.

Welcomed SEBI’s landmark move, viewing it as a catalyst to broaden investor participation, enhance liquidity, and strengthen REITs as a mainstream asset class The reclassification of REITs as equity instruments is also expected to facilitate greater investments by mutual funds and other institutional investors. SEBI noted that REITs share the characteristics of equities higher liquidity and closer alignment with global market practices. This alignment is anticipated to make REITs more attractive to a broader range of investors, thereby increasing their participation in the market Furthermore, the decision to classify REITs as equity is expected to lead to increased inflows from mutual.

Funds and greater institutional participation. The reclassification opens the door for REITs to be included in equity indices, which could lead to increased investor interest and capital inflows. This move represents a major step toward integrating real estate assets more fully into the broader financial market, potentially improving liquidity and promoting diversification in investment portfolios The Indian REIT market has experienced steady growth since its first listing in 2019, reaching a market capitalization of about $18 billion as of August 2025. With three more REITs expected over the next few years, India is projected to surpass $25 billion in market capitalization by 2030.

This growth underscores the increasing significance of REITs in India’s investment landscape and highlights the potential for further expansion in the sector SEBI’s decision to classify REITs as equity instruments is a progressive step that aligns India’s REIT ecosystem with global best practices (Assam) This move is expected to deepen the REIT market, improve liquidity, and expand investor participation, thereby strengthening the overall investment landscape in India. The IRA’s support for this decision underscores the importance of such reforms in fostering a robust and vibrant REIT market in the country.