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Sebi will classify REITs as equity-related instruments from January 01, 2026, boosting Mutual Funds and SIFs participation. InvITs remain hybrid.
Sebi Overhauls REIT Framework: Equity Tag From Jan 2026
The Securities and Exchange Board of India (Sebi) has notified that Real Estate Investment Trusts (REITs) will be classified as equity-related instruments from January 01, 2026. It aims to facilitate enhanced participation by Mutual Funds and Specialized Investment Funds (SIFs) in REITs.
“With effect from January 01, 2026, any investment made by Mutual Funds and SIFs in REITs shall be considered as an investment in equity-related instruments,” Sebi said in the circular dated November 28.
InvITs To Stay Hybrid Instruments
InvITs, however, will continue to be classified as hybrid instruments for the purpose of investments by Mutual Funds and SIFs.
Sebi, in its circular, encouraged AMCs to make efforts to divest REITs from respective portfolios of debt schemes considering the market conditions, liquidity and interest of investors.
Both REITs and InvITs pool investor funds and have a designated trustee, sponsor and manager, but their priorities differ from each other. Under REITs, the focus is on completed and income-generating real estate, while InvITs invest in roads, power plants and other infrastructural projects. REITs require at least 80 per cent of their assets to be in completed properties and a maximum of 20 per cent in under-construction projects or related securities.
REITs Inclusion In Indices After July 1, 2026
Sebi in the circular also said that any inclusion of REITs in the equity indices will be carried out only after a period of six months i.e, July 1, 2026.
Including REITs in major indices can be a game-changer because it automatically channels institutional capital, particularly from passive and index-linked funds, into the sector, according to Karan Malik, Associate Director, Investments, Realistic Realtors.
“That influx improves liquidity, lowers volatility, and encourages long-term participation. But for REITs to sit comfortably alongside traditional equities, Sebi must tighten valuation frameworks, standardise quarterly disclosures, and resolve inconsistencies in how rent escalations, lease terms, and asset pipelines are reported. These gaps currently limit deeper analyst coverage and investor comfort. If the reforms are executed well, India could develop a REIT ecosystem that mirrors the scale and stability of markets like the US or Singapore,” he added.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
November 29, 2025, 14:51 IST
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