New Delhi, Sep 12 : The Indian real estate investment trust (REIT) industry, with a market capitalisation of about $18 billion in August 2025, is projected to reach $25 billion in the next four years -- around 38 per cent surge -- a report said on Friday.

The Indian real estate investment trust (REIT) market has grown steadily since its initial listing in 2019.

"Attractive yields of 6-7 per cent, coupled with rental escalations and capital appreciation opportunities, make Indian REITs highly competitive compared to global peers," Anarock Capital and Real Estate Developers' Associations of India (CREDAI) said in a joint report.

The combination of regulatory confidence, market depth, and growth potential ensures that the country's REITs will play a defining role in shaping the future of Indian real estate.

'Indian REITs are late to the party, but now lead the dance. Despite its late entry compared to global peers, India has strong fundamentals. The distribution yields, currently averaging at 6-7 per cent, are well above many mature markets such as the US and Singapore, among others," said Shobhit Agarwal, CEO, Anarock Capital.

Average distribution yields of Indian REITs are competitive with fixed-income instruments but have the added potential for capital appreciation. "We take a deep dive into this phenomenon in the report," Agarwal added.

Despite REIT guidelines being introduced in 2014 and the first listing only in 2019, the Indian REIT market accounts for just 20 per cent of institutional real estate, far below the US (96 per cent) or even Asian peers like Singapore (55 per cent) and Japan (51 per cent).

This limited penetration is largely because Indian REITs are so far concentrated in 'Grade A' commercial office assets, which offer scale, transparency, and stable cash flows.

As the market matures, diversification is expected through data centres and logistics REITs, supported by rising digital demand and e-commerce growth, while retail mall REITs may follow with ongoing consolidation, the report stated.

With more asset classes becoming REITable, India's penetration could potentially rise to 25'30 per cent of institutional real estate by 2030, positioning it as one of the fastest-growing REIT markets globally.

'Over 60 per cent of India's REIT market value today rests with a very small set of players, with a strong base in Grade A offices linked to IT and BFSI," said Shekhar Patel, President, CREDAI.

The future, however, holds far wider promise. As India's cities grow, infrastructure strengthens, and the economy diversifies, REITs will expand into retail, logistics, housing, and new-age assets, Patel added.

The report highlighted that globally, industrial REITs are gaining significant momentum on the back of sustained e-commerce penetration, supply chain re-optimisation, and last-mile logistics demand, ensuring long-term rental growth and capital appreciation.

Data centre REITs, valued at $250 billion by 2024 and projected to double within seven years, are expanding rapidly due to surging cloud adoption, AI-driven workloads, and hyperscale infrastructure needs.

India is also well-positioned to mirror this trend, as reflected in a 60 per cent on-year surge in industrial and logistics leasing in H1 2025, a 30 per cent YoY rise in warehousing absorption, and a threefold increase in institutional investment to $2.5 billion in 2024, the report stated.

/IANS