SEBI Reclassifies REITs as Equity: A Boost for Indian Real Estate Investment

India’s capital markets have taken a significant step forward as the Securities and Exchange Board of India (SEBI) has reclassified Real Estate Investment Trusts (REITs) as equity instruments. The move is expected to boost investment, particularly from mutual funds and strategic institutional investors, by allowing a larger class of investors to include REITs under equity-allocations.

Previously, REITs and InvITs were categorised as “hybrid” instruments due to their mix of equity-like and debt-like features. SEBI’s change reflects growing recognition that REITs, with their relatively higher liquidity, income streams and alignment with global practices, more closely resemble equity in many respects. Under the updated norms, REITs will be treated as equity for purposes of mutual fund exposure limits and index eligibility.

The Indian REITs Association and industry participants have welcomed the reform, noting it could deepen the REIT market, improve liquidity and lower the cost of capital for real estate developers. The reclassification is seen as a catalyst for broader investor participation, both domestic and global.