Investment Opportunities in India’s Commercial Real Estate

Published on January 17, 2026 and written by Cyril Jarnias

Long confined to a “niche allocation” role, commercial real estate in India is becoming one of the major playgrounds for international and domestic investors. The rise of very high-quality offices, the explosion of logistics and warehousing, the upscaling of retail, and the growth of data centers are reshaping the landscape. At the heart of this transformation, one tool is a game-changer: Real Estate Investment Trusts, or REITs.

A Market Shifting into a New Dimension

In just a few years, commercial real estate has transitioned from the status of an emerging asset class to a pillar of capital allocation strategy in India. Projections are being made, all pointing upwards. Several estimates converge: the value of the Indian commercial real estate market, estimated between $40 and $75 billion around 2024, could exceed $100 billion by the end of the decade. Other, more ambitious scenarios project a rise to over $600 billion by 2035.

Office real estate represents the largest slice of the pie, with nearly half of the commercial market, occupancy rates of 87 to 90% in prime locations, and record demand. In 2024, gross office absorption reached approximately 79 million sq ft, a historic high, with a new wave of records in the first nine months of 2025 where net demand crossed 40 million sq ft. Office rents have surpassed their pre-Covid levels in all major metros, with annual increases reaching up to 15–17% in Mumbai and Hyderabad during certain periods.

*The area figures cited in studies are in square feet; they are left as sq ft in tables to remain consistent with the sources.

Why Indian Commercial Real Estate Attracts So Much Capital

Several forces combine to make India particularly attractive.

First, yields. Commercial assets offer significantly higher rental yields than residential. Typically, good-quality offices, retail, or warehouses generate gross yields around 7 to 11% per year, whereas residential hovers around 2.5–3.5%. Adding capital appreciation – often 7–10% annually in good cycles, sometimes more – total returns (rental + capital gains) can easily rise between 13 and 15% per year, even up to 18% during certain bullish phases.

This is compounded by the growth of the IT/ITeS, BFSI (Banking, Financial Services & Insurance), e-commerce, logistics, manufacturing, and pharmaceutical sectors. They drive demand for Grade A offices, modern warehouses, data centers, and industrial parks.

Finally, the regulatory framework has become clearer. The RERA law has strengthened transparency, the rise of REITs has professionalized asset ownership, and India remains very open to foreign capital in permitted segments (100% FDI under the automatic route in real estate development projects and logistics, subject to conditions).

REITs in India: The Institutional Entry Point into Offices and Malls

At the center of this new ecosystem, REITs hold a strategic position. A REIT is a structure that owns and operates income-generating real estate assets (offices, malls, warehouses, hotels, data centers, etc.) and distributes the majority of its cash flow to unitholders.

How Indian REITs Work

REITs in India are regulated by the Securities and Exchange Board of India (SEBI). The framework is highly regulated and clearly aims for income stability for investors:

– At least 80% of assets must be invested in completed, revenue-generating buildings.

– Maximum 10% of the portfolio can be allocated to under-construction projects.

– At least 90% of distributable cash flow must be paid to unitholders, at least twice a year.

– REITs must have a minimum net worth (approx. Rs 5 billion for traditional REITs), with a three-tier governance structure: sponsor, trustee, and asset manager.

A key point for retail investors is accessibility. SEBI has progressively lowered entry barriers. The minimum amount to invest in a REIT on the stock exchange is now around Rs 10,000–15,000, with a reduced lot size to a single unit. This brings listed real estate investment closer to the equity fund universe.

Listed REITs: Who Does What, Where, and With What Results

India currently has four listed REITs, all on the BSE and NSE:

– Embassy Office Parks REIT

– Mindspace Business Parks REIT

– Brookfield India Real Estate Trust

– Nexus Select Trust (retail-oriented)

A fifth, Knowledge Realty Trust – also focused on offices – is in the works, backed by Blackstone and Sattva Developers, with about 48 million sq ft of Grade A offices (including 37 million operational).

The first three REITs – Embassy, Mindspace, Brookfield – are concentrated on institutional office real estate (IT campuses, Grade A business parks). Nexus is the first REIT specialized in malls and organized retail.

The table below summarizes some key financial indicators for the main REITs (FY23 / FY25–Q1 FY26 based on available data):

REIT	Market Capitalization (Rs cr)	Distribution FY23 (Rs/unit)	Occupancy Rate	Net Debt / Value
Embassy Office Parks	40,111	21.71	88%	33%
Mindspace Business Parks	28,010	19.10	93.7%	25%
Brookfield India	21,719	20.10	89%	28%
Nexus Select Trust	24,695	n.a. (retail)	97%	18%

Collectively, these REITs manage an operational portfolio of over 105–129 million sq ft of Grade A offices and retail. Their gross asset value has grown at a compound annual rate of about 36% since inception, and cumulative distributions exceed Rs 14,300 crores since 2019 – more than the combined dividends of all companies in the Nifty Realty index during the same period.

Structural Demand Driven by GCCs and Major Tenants

The performance of REITs relies on a robust operational reality: the demand for Grade A offices in major metros. During FY 2024-2025, the three office REITs leased over 16 million sq ft, accounting for nearly 20% of all gross leasing volume recorded in the country’s top eight cities.

Global Capability Centers play a central role here. Over the last four quarters up to Q1 2025, these centers represented on average 28–29% of gross office demand nationwide, but between 40 and 60% of the space leased in parks owned by REITs. In other words, REITs disproportionately capture the demand from these very high-quality tenants, who seek modern, green-certified, secure, and well-connected campuses.

Consequence: Office REIT occupancy rates hover around 90%, even higher for some core assets, and rents continue to rise. In the tightest markets, like certain micro-markets in Mumbai, Bengaluru, or Gurugram, cumulative rent growth since 2019 can reach 25%.

Growth Potential Still Largely Underutilized

The depth of the “REIT-able” office market shows how early-stage the listed segment still is. India has about 650 million sq ft of Grade A offices, of which 310–320 million are immediately suitable for securitization via REITs according to a first estimate. Another analysis puts this REIT-able potential at about 510 million sq ft, or 53% of the Grade A stock.

The geography of this potential is also instructive:

City / Region	Share of REIT-ready Office Stock
Bengaluru	31%
Mumbai Metropolitan Region (MMR)	16%
Hyderabad	15%
Other Major Cities (Delhi-NCR, Pune, Chennai, etc.)	Remainder

Bengaluru dominates, driven by its role as the technology capital and GCC hub. MMR (Mumbai and region) follows, as the country’s financial heart, and Hyderabad completes this top trio thanks to a very pro-business policy, skilled workforce, and still competitive rents.

Furthermore, SEBI launched a new category in 2024: Small and Medium REITs (SM REITs). These vehicles, with a significantly lower asset threshold – from Rs 50 crores (500 million) to Rs 500 crores – will allow more modest portfolios (single buildings, mid-sized portfolios) to be listed. They must invest at least 95% of their assets in completed, revenue-generating buildings and attract a minimum of 200 investors. The first approvals have already been granted. This is an important step to further “democratize” commercial real estate investment.

REITs, Direct Investment, InvITs: Comparing Entry Points

For an investor, the question is no longer whether to invest in Indian commercial real estate, but rather how. Three main avenues emerge: direct investment, REITs (including SM REITs), and InvITs (Infrastructure Investment Trusts).

Direct investment requires very high tickets – several tens of millions of rupees for a well-located small office, much more for a floor or entire building – and fully exposes one to management, vacancy, and liquidity issues. On the other hand, it offers total control, potentially specific leverage effects, and “value-add” or repositioning strategies.

InvITs, finally, target infrastructure (roads, bridges, power networks, etc.) rather than offices or malls. The two most well-known listed InvITs – India Grid Trust and IRB InvIT – have offered, for example, total returns of 56% and 83% to their unitholders over a recent financial year, illustrating the potential of this format for operational infrastructure. The operating logic is similar to REITs, but the risks and performance drivers are tied to infrastructure usage rather than rents.

The Office Boom: Record Absorption, Rising Rents, Declining Vacancy

Beyond REITs, one must look at the office market as a whole to gauge the scale of opportunities.

Across the six to eight major metros (Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Pune, Chennai, Kolkata), annual demand for Grade A offices already revolves around 60 to 80 million sq ft. The year 2019 marked a record around 66 million, since surpassed. After the pandemic slump, the trajectory has rebounded upward, with a cumulative net absorption of 264 million sq ft between 2019 and 2024 across six major markets.

Several indicators show a healthy market:

On the rent side, the trend is also clear. In Q3 2025 alone, average office rents rose in all major metros, with quarterly increases of 3.2% in Delhi-NCR, 2.8% in Hyderabad, 1.4% in Bengaluru, and 1.3% in Chennai. Year-on-year, some cities show increases of 18.7% (Hyderabad) or 12.3% (Kolkata), while Bengaluru and Delhi-NCR are around 8%.

Prime micro-markets – Golf Course Extension Road, Cyber City or Noida Expressway in NCR, Outer Ring Road and Whitefield in Bengaluru, Bandra-Kurla Complex and Goregaon/JVLR in Mumbai – have seen up to 25% rent increases between 2019 and 2024.

Who Occupies These Offices?

The sectoral composition of office demand gives a good idea of the risks and performance drivers:

Bengaluru consistently dominates the rankings, with up to 25% of national transactions depending on the year, followed by Delhi-NCR, Mumbai, Pune, and Hyderabad.

Logistics, Warehouses, and Industrial: The Other Major Yield Driver

While offices capture media attention via REITs, the great silent revolution is happening in warehouses and logistics.

An Explosion of Volumes and Investments

In 2024, the warehouses & logistics sector attracted nearly $2 billion in institutional investment, representing nearly 29% of all real estate flows in India. Another study even estimates these investments at $2.5 billion, making it the top segment by investment volume (39% of deals).

The growth is spectacular over five years: barely $847 million in 2020, compared to nearly $2 billion in 2024, with a peak of $1.86 billion in 2022 before a breather in 2023. Foreign investors account for about 80% of flows in this segment, and some landmark deals illustrate the appetite for these assets, such as a $1.5 billion investment by ADIA and KKR in Reliance Retail’s warehousing assets.

Who Leases These Warehouses, and Where?

The key players driving demand are:

– Logistics and 3PL (Third-Party Logistics) providers, representing about 30–33% of leased space.

– Industry and manufacturing, whose share has risen to 24–32% depending on the period, supported by “Make in India” policies and PLI (Production Linked Incentive) schemes.

– E-commerce, with demand growth sometimes reaching 150% year-on-year, especially driven by “quick commerce.”

– In some studies, 3PL, manufacturing, and e-commerce cumulatively account for over 65% of demand.

The major logistics metros are Mumbai (and its ring like Bhiwandi, Taloja), Delhi-NCR (Bilaspur, Farukhnagar), Pune (Chakan), Chennai (Sriperumbudur), Bengaluru (Bommasandra, northwest corridor), Hyderabad, Ahmedabad, and Kolkata. Mumbai, for example, recorded an 82% increase in its warehouse absorption in 2024, and increases exceeding 120% in certain quarters.

A Stock Modernizing at High Speed

The Grade A warehouse stock in the top eight markets has nearly tripled since 2019, rising from about 88 to over 238 million sq ft in 2024, with the share of Grade A in total stock climbing towards 50% and more. Overall, the warehousing and logistics supply in these markets already exceeds 400–500 million sq ft and is expected to reach 700 million by 2028. Vacancy remains contained, often around 10–12%, a sign of a healthy balance for rents.

In the medium term, rating agencies estimate supply growth around 13–14% per year, and institutional developers are planning an additional 80–90 million sq ft over two to three years. The government is pushing strongly via the National Logistics Policy, the infrastructure status for logistics, the unified GST which legitimizes and favors the structuring of distribution networks, and major highway and railway corridors.

For an investor, this segment therefore offers a rare combination: strong structural growth, high rental yields (often 8–10% for well-located warehouses), demand visibility (e-commerce, manufacturing, 3PL), and, increasingly, the possibility of exposure via institutional platforms or structured vehicles that reduce operational risk.

Cities and Micro-markets to Watch

India is not a homogeneous market; it resembles a portfolio of very different “sub-markets.” For an investor, understanding this map is essential.

Bengaluru, Hyderabad, Mumbai, Delhi-NCR, Pune, and Chennai concentrate the majority of office and logistics activity, but Tier 2 cities (Ahmedabad, Jaipur, Lucknow, Coimbatore, Kochi, Nagpur, Indore, Chandigarh…) are rapidly gaining importance, driven by lower costs and upgraded infrastructure.

A few examples:

Tier 2 cities sometimes show even more spectacular dynamics. Some, like Lucknow or Coimbatore, have recorded value increases exceeding 40–50% over a year in certain segments, and transaction volumes are rising rapidly. For an investor, this opens the door to geographic diversification strategies combining the stable yield of mature markets and the strong capital appreciation potential of emerging cities.

The Rise of Green and “Smart” Buildings

Another major transformation: India has become one of the world leaders in “green” construction. The country is estimated to have over 10 billion sq ft of commercial space certified IGBC, LEED, GRIHA, or equivalent, and over 700 million sq ft of office buildings are now “green-certified.”

The economic benefits are tangible:

In neighborhoods like Outer Ring Road in Bengaluru or Cyber City in Gurugram, over 90% of the Grade A office stock is already green-certified. Across the top seven markets, about 44% of the Grade A stock was green in 2022, on a trajectory expected to exceed 50% in the coming decade. New supply pipelines themselves are massively dominated by certified projects – some studies cite 60–80% of space under development.

An Increasingly Sophisticated FDI and Financing Framework

India has progressively built a regulatory framework that facilitates the entry of foreign capital into commercial real estate, while establishing safeguards.

Regarding FDI, development projects (townships, integrated residential and commercial complexes, hotels, urban infrastructure, etc.) can accept up to 100% foreign capital under the automatic route, subject to a three-year lock-in before exit (except for certain assets like hotels or hospitals). Real estate brokerage and mall or business park management companies are also open to 100% FDI.

Beyond equity, the arsenal includes:

The macroeconomic framework – GDP growth around 7% for several years, the RBI’s recent repo rate cut to 6% – strengthens the investment thesis, by reducing debt costs and supporting user demand.

Real Risks, But Increasingly Manageable

Then comes the question of risks. They exist and must be integrated into any serious strategy:

For an investor, the emergence of REITs, SM REITs, and institutional platforms mitigates a large part of these risks, by pooling assets, professionalizing management, and offering liquidity via the stock exchange. But basic discipline remains immutable: fine analysis of the micro-market, developer quality, tenant strength, lease structure, sectoral exposure, and an investment horizon of five to seven years minimum to smooth out cycles.

What This Means Concretely for an Investor

Faced with this picture, how to position oneself?

For an individual investor, two main strategies dominate:

For institutional investors, the palette expands further: co-development partnerships with major developers, taking stakes in pre-REIT portfolios, structuring SM REITs on niche assets (regional logistics parks, data center clusters), or structured debt vehicles to support the growth of well-capitalized developers.

The resulting equation is simple: for investors ready to work finely on asset and vehicle selection, investment opportunities in Indian commercial real estate – particularly via REITs – have probably never been so numerous, nor so well-structured.