REIT Penetration in Office Market Can Reach 25-30% by 2030: Colliers India

Gurgaon, August 26, 2025: The Real Estate Investment Trust (REIT) market is steadily progressing from a “nascent” to “early growth” stage with close to 140 mn sq ft (MSF) of real estate assets, including office and retail spaces already getting listed.

According to Colliers’ latest report ‘REITs Unlocked: Accelerating India’s Real Estate Maturity’, the four listed office REITs encompass close to 133 MSF of Grade A office space. Additionally, about 371 MSF of office assets, accounting for about 46 per cent of the existing Grade A stock, can potentially come under future REITs.

Amongst the top seven cities, Bengaluru accounts for the bulk of additional REITable stock with a share of 24 per cent, followed by Hyderabad at 19 per cent. Furthermore, REITs have around 34 MSF of under construction supply and this is likely to become operational in the next one to two years.

Overall, Indian REITs continue to pick up pace, especially in the office sector, supported by new listings, broadening of occupier base and growing institutionalisation in the segment.

Existing REIT/InvIT portfolio in India

India office REIT snapshot

Interestingly, at a micro market level, about 223 MSF, or 60 per cent, of the additional REITable office stock lies within secondary business districts (SBDs) of the top seven cities. Amongst these SBDs, Bengaluru leads with a share of 36 per cent, followed by Hyderabad at 29 per cent.

While the additional REITable stock is predominantly concentrated in SBDs and peripheral business districts of major cities, about 14 per cent of Grade A buildings in central business district localities have the potential to be listed as future REITs.

Micro market profile of REITable stock

Source: Colliers

Note: Overall % share represents city share of REITable stock within the top seven cities; Share for CBD, SBD and PBD is for each respective city

CBD – Central Business District; SBD – Secondary Business District; PBD – Peripheral Business District | Data pertains to Grade A office buildings

Tenant quality drives occupancy levels and average rentals of properties under REITs

Mirroring the resilience of the commercial real estate sector, office REITs continue to demonstrate strong operational performance amid global uncertainties. With occupancy rates exceeding 86 per cent, demand for premium office spaces remains robust. Steady rental income growth, underpinned by long-term leases and high tenant retention, further reinforces the credibility of REITs in the Indian office market.

Tenant profile of existing office REITs

Source: Latest respective REIT quarterly filings reports, DRHP (Knowledge Realty), Colliers

Note: Others include healthcare & pharma, etc

“Office REITs in India are at an early growth stage, with approximately 16 per cent of Grade A stock already listed on the equity markets. An additional 371 MSF of office space can come under future REITs, much of which is concentrated in SBDs across the top seven markets,” says Badal Yagnik, CEO, Colliers India.

“Rising demand from global capability centres (GCCs) along with space uptake by technology and BFSI firms is driving occupancy levels. This, in turn, is expected to accelerate the growth of office REITs in India. For developers and investors, SBDs offer a significant opportunity to capitalise into these high-demand areas, unlocking value and driving long-term growth for their REIT portfolios.” 

REIT market in India still relatively smaller compared to other global markets

Globally, REITs across APAC, Europe and America have expanded into multiple assets such as office, retail malls, industrial warehouses, hospitals, residential apartments, data centres, etc.

Japan and Singapore are relatively established REIT markets in the APAC region with investors having access to a diverse set of underlying real estate assets. However, the REIT/ Infrastructure Investment Trust (InvIT) market in India is relatively smaller in scale and has listed office, retail and warehousing portfolios within the trusts.

The regulatory environment in India is strong and REITs can ultimately expand to newer asset classes. Interestingly, SEBI has been championing the case for Small and Medium Real Estate Investment Trusts in recent years.

“The momentum of REITs in India is steadily gathering pace fuelled by rising investor confidence and growing focus on institutionalisation of real estate. Diversification of REITs into different asset classes over the last few years and recent listings have enhanced the participation of retail investors,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

“Office REITs, in particular, have performed well and currently have a market penetration of around 16 per cent. With strong fundamentals in play, 25-30 per cent of the overall office stock in India can potentially come under REITs by 2030.”

Increasing diversification and integration of ESG practices in Indian REITs

REITs are increasingly diversifying beyond office spaces driven by a combination of investor demand for higher yields, the need for portfolio resilience and evolving real estate dynamics.

Similar to mature markets, REITs and InvITs can potentially further expand into segments such as retail, warehousing, hospitality and even data centres. Additionally, with a track record in mature markets, rental housing segments such as senior housing, co-living, student housing, etc., can become futuristic REIT bets in India as well.

Currently, 86 per cent of operational office portfolios under existing REITs are green-certified, reflecting strong alignment with international sustainability benchmarks.

Over the next few years, Indian REITs are targeting green certification of their entire portfolios. They also aim to increase renewable energy usage by 30–35 per cent. Overall, these measures reinforce their appeal to ESG-focused investors and can play a pivotal role in the next growth phase of REITs.