Summary: For REITs and InvITs, public listing is increasingly being viewed in the context of investor access, financing opportunities and a changing regulatory environment. The article highlights that units held by individual investors across five publicly listed InvITs increased from approximately 82.38 crore on June 30, 2025 to 111.73 crore on June 30, 2026, an increase of around 35.6% in one year. It also notes that, with effect from January 1, 2026, SEBI classified investments by mutual funds and Specialized Investment Funds in REITs as equity-related instruments, creating another route for investment through mutual fund products. The possibility of increased institutional participation is also discussed, including reported consideration by IRDAI of higher investment limits for insurance companies in REITs and InvITs. On the regulatory side, the article refers to favourable changes across taxation, foreign investment, operational requirements and financing. It states that the Taxation and Other Laws (Amendment) Act, 2026 provides for continued exemption of dividend income distributed to unitholders through a business trust even where the underlying SPV has opted for the concessional corporate tax regime. It further notes SEBI’s proposal to permit REITs and publicly listed InvITs to issue Depository Receipts to foreign investors against units. Taken together, the article concludes that wider investor participation, regulatory support and improving access to capital make the present period one of the better times for REITs and InvITs to evaluate public listing.
- Introduction
- The Listing Equation Is Changing
- Increased Individual Participation
- Mutual Funds Are Opening Another Route to REIT Investment
- Institutional Investor Participation May Deepen Further
- Regulatory Framework Is Also Moving in a Favourable Direction
- Tax Treatment Is Moving Favourably
- Access to Foreign Investors May Become Easier
- Conclusion
Introduction
For REITs and InvITs, the decision to go public is as much about timing as it is about strategy. The trust may be mature and ready for the public markets, but whether listing creates the desired value also depends on the market and regulatory environment in which that decision is taken.
Over the last year, this environment has been changing considerably. For REITs and InvITs considering public listing, it may therefore be useful to look again at whether the listing window has become more favourable.
The Listing Equation Is Changing
Public listing is no longer only about raising funds or providing liquidity to existing investors. For InvITs and REITs, the decision is increasingly connected with the type and depth of investor base that the trust can access and the financing opportunities that become available after listing.
Several developments over the last year indicate movement in this direction. these developments can be classified majorly in to 2(two) categories, namely
- Increasing investor participation, and
- Favourable regulatory changes.
Increased Individual Participation
One of the important changes visible in the InvIT market is the increase in participation by individual investors. An analysis of the unitholding patterns of five InvITs which were publicly listed both on June 30, 2025, and June 30, 2026, shows that units held by individual investors increased from approximately 82.38 crore units to 111.73 crore units. This represents an increase of around 35.6% in one year.
“. Although the category of non-institutional investors includes entities other then individuals, yet, the increase in the actual number of units held by individuals is still significant. It indicates that investment in InvITs is gradually moving beyond an investor base largely dominated by institutions.
For a publicly listed InvIT, this means access to a wider category of investors who are becoming more familiar with the product.
Mutual Funds Are Opening Another Route to REIT Investment
Another important development is the growing role of mutual funds in the REIT market.
With effect from January 1, 2026, SEBI classified investments by mutual funds and Specialized Investment Funds in REITs as investments in equity-related instruments, with the objective of facilitating greater participation by such funds in REITs.
The effect of this change is also beginning to be seen in the form of mutual fund products providing specific exposure to REITs. Such schemes provide investors with another route to participate in the REIT market without necessarily investing directly in individual REIT units.
For REITs, this is favourable because it creates an additional channel through which investment can flow into the listed REIT market and can help broaden the investor base.
Institutional Investor Participation May Deepen Further
The possibility of increased institutional participation is also emerging.
In May 2026, media reports indicated that, considering the increased participation of insurance companies in IPOs of InvITs, IRDAI was considering a proposal to increase the maximum limits up to which insurance companies can invest in REITs and InvITs.
If approved, the proposal would increase the capacity of insurance companies to invest in these vehicles and provide another potential source of institutional capital for the sector.
These developments relating to individual investors, mutual funds and insurance companies indicate that the potential investor base for REITs and InvITs is becoming wider and more diversified.
Regulatory Framework Is Also Moving in a Favourable Direction
Along with efforts to increase investor participation, the regulatory regime also appears to be moving towards facilitating the growth of REITs and InvITs. A number of reforms have been proposed across taxation, foreign investment, operational requirements and financing, which collectively seek to make these structures more attractive and workable.
Tax Treatment Is Moving Favourably
The Taxation and Other Laws (Amendment) Act, 2026 has brought another favourable change for investors in REITs and InvITs. The amendment provides that dividend income distributed to unitholders through a business trust will remain exempt in their hands even where the underlying SPV has opted for the concessional corporate tax regime.
Earlier, this exemption was not available where the SPV had opted for the concessional tax regime. Removal of this distinction makes the tax treatment of such dividend distributions more favourable for unitholders and can further add to the attractiveness of REITs and InvITs as an investment option.
This can make investment in InvITs and REITs more attractive, particularly for investors falling in higher tax brackets. More importantly, it indicates the direction in which the tax framework relating to investment through business trusts is moving.
Access to Foreign Investors May Become Easier
The investor base may not remain limited to domestic investors.
SEBI has proposed permitting REITs and publicly listed InvITs to issue Depository Receipts (DRs) to foreign investors against units of the trust as the underlying securities.
The proposal if implemented, would provide another route for foreign investors to invest in REITs and publicly listed InvITs in foreign currency. however, as mentioned in above Para, this additional root of excessing foreign capital is available only to those InvITs who are publicly listed. This highlights that public listing would open an additional gate way for obtaining foreign capital.
Conclusion
The environment for REITs and InvITs is presently moving favourably on more than one front. Individual participation is increasing, new investment channels through mutual funds are opening up and the possibility of higher participation by institutional investors can further broaden the investor base.
At the same time, the regulatory framework is also evolving. Proposed changes relating to taxation, foreign investment and the operating framework of REITs and InvITs, indicate an effort to facilitate both investment and ease of doing business in the sector.
These developments are important when viewed together. A wider investor base makes public markets more relevant, while regulatory reforms can make the listed platform more workable and attractive.
For REITs and InvITs which have been considering public listing, the present combination of increased investor participation, regulatory support and improving access to capital probably makes this one of the better times to evaluate public listing and take advantage of the positive market dynamics.
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Article is written by Rutuja Umadikar- Deputy Manger from MMJC.
