Budget 2026 proposes accelerating the ‘recycling’ of real estate assets owned by central public sector enterprises (CPSEs) by creating dedicated Real Estate Investment Trusts (REITs).
In her Budget speech, Finance Minister Nirmala Sitharaman said, “Over the years, REITs have emerged as a successful instrument for asset monetisation. I propose to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs”.
Real estate experts say that the proposal to pool government real estate and land via REITs is expected to unlock large prime-city holdings. Retail investors could gain access to high-quality, income-generating real assets, with the benefits of regular yields, potential long-term appreciation, and liquidity through listed markets.
What are REITs?
REITs are investment vehicles that allow individuals to invest in large, income-generating commercial properties, such as office buildings, malls, or warehouses, without owning the properties directly. Investors earn a share of rental income and can benefit from capital appreciation, while enjoying liquidity similar to that of stocks, since REITs are listed on exchanges.
At present, there are five listed REITs in India – Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge Realty Trust.
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By creating dedicated REITs for CPSE properties, the government aims to monetise high-value assets efficiently. For investors, this means access to high-quality commercial properties that were previously difficult to tap into. Typically, CPSE-owned assets are well-located, professionally managed, and have stable tenant profiles, making them attractive for long-term income-seeking investors, say experts.
CPSEs hold substantial land assets identified for monetisation under the government’s National Asset Monetisation Pipeline. With REIT structures typically attracting large funds and institutional investors, the move could help the government accelerate its asset monetisation plans, said experts.
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For retail investors, such REITs offer several advantages: they can diversify an investment portfolio beyond equities and bonds, generate relatively predictable rental income, and potentially provide tax-efficient returns. Moreover, with government backing for these projects, perceived risk may be lower than for private commercial developments, say experts.
What the Budget 2026 proposal means
“The decision to include assets of Central Public Sector Enterprises (CPSEs) into the Real Estate Investment Trust (REIT) structure is a significant shift and is likely to have a multi-layered impact on the asset class from deepening the market, as these entities have large assets, to increasing the participation of institutional investors, including mutual funds,” said Anshuman Magazine, chairman and CEO – India, South-East Asia, Middle East & Africa, CBRE.
“Since CPSEs are often mandated to provide steady returns, their REITs are expected to focus on high-yield, stable income distributions,” says Magazine.
“For retail investors, this expands access to high-quality, income-generating real assets that were earlier largely available only to institutions. They offer the dual benefit of regular yield visibility and participation in long-term asset appreciation, while providing liquidity through listed markets. Over time, these investment engines in the market will also improve transparency, valuation discipline and governance across the real estate ecosystem. strengthening overall investor confidence,” says Tanuj Shori, founder and CEO, Square Yards.
However, investors should remember that REIT returns are influenced by factors such as occupancy rates, interest rates, and property valuations. While REITs offer a path to participate in India’s growing commercial real estate sector, they should be seen as a medium- to long-term addition to a diversified portfolio rather than a get-rich-quick instrument.
As per Chintan Patel, partner, Deal Advisory and Head of Real Estate & Hospitality and Transport & Logistics, KPMG in India, the proposal to pool government real estate and land holdings through instruments such as REITs is also an interesting one to look forward to. There are large tracts of land and real estate in prime locations across metropolitan cities that could be unlocked through this route.
The Indian REITs Association welcomed the announcement. “It reflects a clear move from passive ownership to efficient, market-linked asset management, while unlocking long-term value from mature public assets and recycling capital into fresh infrastructure development. By positioning REITs as a key mechanism for asset monetisation, the Budget reinforces their growing role in India’s infrastructure financing ecosystem. Dedicated CPSE REITs can accelerate capital recycling, improve balance-sheet efficiency for public enterprises, and expand access to high-quality, income-generating assets for a wider investor base through transparent and regulated instruments,” it noted.
“Dedicated REIT structures for CPSE asset monetisation, strengthens the pipeline for long-term institutional capital across real estate and infrastructure,” added Ramesh Nair, managing director and CEO, Mindspace Business Parks REIT.
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Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics