Archive · 28 Nov 2025
SEBI Reclassifies REITs as Equity
The Securities and Exchange Board of India (SEBI) has decided to change how Real Estate Investment Trusts (REITs) are classified.
Starting from January 1, 2026, REITs will be treated like equity investments.
This means mutual funds and specialized investment funds can invest more easily in REITs.
The change is expected to make the market bigger and bring it closer to how other countries classify these investments.
However, some people worry that this might make the market more volatile.
Existing investments in REITs as of December 31, 2025, will be exempt from the new rules, but fund managers are encouraged to gradually sell off these investments.
REITs will also be included in equity indices starting July 1, 2026, which could increase demand for them.
SEBI reclassifies REITs as equity-related instruments effective January 1, 2026.
Existing REIT investments as of December 31, 2025, will be grandfathered.
AMCs encouraged to gradually divest REITs from debt schemes.
REITs to be included in equity indices starting July 1, 2026.
The reclassification aims to boost market participation and align with global norms.
- Who
- Securities and Exchange Board of India (SEBI)
- What
- Reclassified Real Estate Investment Trusts (REITs) as equity-related instruments
- When
- Effective from 1 January 2026
- Where
- India
- Why
- To promote higher participation by mutual funds and specialized investment funds (SIFs) and align with global classification norms
Proponents of Reclassification
Critics of Reclassification
Market Participation
Proponents of Reclassification
The reclassification will boost market participation by mutual funds and specialized investment funds (SIFs), deepening the market and aligning with global norms.
Critics of Reclassification
Critics argue that the reclassification might lead to increased volatility and speculative trading, as equity classification could attract short-term investors.
Investment Allocations
Proponents of Reclassification
Proponents believe that the change will increase demand for REITs, as equity schemes and passive funds will allocate more to these instruments once they enter benchmark equity indices.
Critics of Reclassification
Critics contend that the increased allocation to REITs by equity funds might divert investments from other equity assets, potentially impacting their performance.
- Effective Date for Reclassification
- 1 January 2026
- Grandfathering Date
- 31 December 2025
- Inclusion in Equity Indices
- 1 July 2026
- Classification of InvITs
- Hybrid instruments
- Impact on Debt Schemes
- AMCs encouraged to divest REITs gradually
- Index Providers' Role
- Determine inclusion of REITs in indices by July 2026
- Market Cap Classification
- REITs to be treated like regular equity stocks
- Potential Index Inclusion
- Dividend yield indices
Sources
India’s REIT sector records ₹1 trillion market cap, eyes tenfold expansion
Corporates Charge Into Noida, Office Market Rentals Boom 30%
SEBI reclassifies REIT as equity to boost market participation
MF, SIF exposure to REITs to be classified as equity investments from 1 January
