Invested in Nifty 50 index mutual funds? Here’s why you should consider REITs to diversify your portfolio
If your investments are concentrated in Nifty 50 index funds or other equity mutual funds, a new report highlights why Real Estate Investment Trusts (REITs) could be worth considering as a separate asset class.
India’s listed REIT market has expanded rapidly, while REITs have outperformed the Nifty 50 over the past year.
The findings come from the 10th edition of Cushman & Wakefield’s Asia REIT Market Insight series, which tracks developments across Asian REIT markets during 2025-26.
According to the report, India’s REIT market value surpassed Hong Kong for the first time, making it Asia’s fourth-largest REIT market by valuation. As of 31 March 2026, India’s REIT market combined market value is $17.7 billion, behind Japan, Singapore and China.
How have REITs performed against the Nifty 50?
Over the 12 months to June 2026, the four listed Indian REITs with a full year of trading history delivered positive total returns, while the Nifty 50 declined, according to the report.
Mindspace Business Parks REIT delivered total returns of 24.3%, comprising a 6% distribution return and 18.3% capital appreciation. Distribution return is the income investors receive from their REIT units, while capital appreciation refers to the gain or loss from changes in the unit price.
Nexus Select Trust followed with total returns of 23.2%, while Embassy Office Parks REIT and Brookfield India REIT delivered 19% and 11.9%, respectively. In comparison, the Nifty 50 recorded a net decline of 5.2% over the same period.
According to the report, this resulted in a positive spread of 17 to 30 percentage points between the REITs’ total returns and the Nifty 50.
Distribution returns ranged from 6% to 6.8% for the four REITs, compared with 1.2% for the Nifty 50. Capital appreciation ranged from 18.3% for Mindspace to 5.1% for Brookfield India, while the Nifty 50’s price return declined by 6.5%.
This means that adding REIT exposure alongside Nifty 50 index funds could provide some diversification when the broader equity market is under pressure.
What is driving the expansion of India’s REIT market?
According to the report, India’s REIT market has also grown in scale. The operational portfolio of listed REITs increased from 107.5 million sq ft in June 2025 to about 178 million sq ft in June 2026, a rise of nearly 66%.
Despite the rapid portfolio expansion, occupancy remained strong. Office REITs reported occupancy levels ranging from about 90% to 99% at the end of June 2026.
The report noted that “this reflects the tight market conditions that prevail in India’s Grade A office market and also demonstrates the high preference amongst occupiers for institutional quality assets.”
How has REIT access improved for investors?
According to the report, regulatory changes have also broadened the investment case. Following a November 2025 SEBI circular, REITs have been treated as equity for regulatory purposes from the beginning of 2026.
This has widened the pool of investors that can invest in REITs and improved their eligibility for mutual fund and index inclusion.
In 2026, NSE and BSE introduced their maiden indices for REITs and InVITs, potentially widening their reach among investors.
For mutual fund investors, REITs offer a different asset exposure from equity funds. While index and equity funds primarily invest in companies, REITs provide exposure to income-generating real estate assets.
“The last 6-9 months have been encouraging for REITs from the policy perspective, thereby providing encouragement for more investors to look at REITs favorably,” the report noted.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
