SMREIT Market to Exceed $75 Billion Driven by 500 Million Sq Ft Assets

India’s MSMREIT market is entering a new phase of expansion, with industry estimates suggesting it could surpass $75 billion over the next few years. Backed by nearly 500 million sq ft of eligible commercial assets, this segment is emerging as a powerful alternative for investors seeking stable returns and regulated exposure to mid-sized office, retail, and logistics properties. A new analysis by CBRE South Asia highlights how the MSMREIT market is reshaping access to institutional-grade real estate while deepening transparency and professionalism across the sector.

What Are SMREITs and Why Are They Gaining Popularity?

SMREITs, or Small and Medium Real Estate Investment Trusts, are regulated investment vehicles that own or manage income-producing assets valued between ₹50 crore and ₹500 crore. Unlike traditional REITs, which focus on large commercial portfolios, SMREITs target mid-sized properties that have historically lacked formal institutional frameworks.

This structure allows investors to buy units much like buying shares, offering access to high-value real estate with lower minimum investments. As the MSMREIT market matures, its appeal lies in transparent governance, steady rental income, and exposure to assets otherwise inaccessible to retail investors.

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A $75 Billion Opportunity Backed by 500 Million Sq Ft of Assets

According to CBRE’s report, India has over 500 million sq ft of office, retail, and logistics stock that qualifies for SMREIT structures. As these assets move into regulated frameworks, the MSMREIT market could easily exceed $75 billion in value.

The study also notes that Grade A+ office assets continue to anchor institutional demand, offering predictable income streams and long-term appreciation. With India’s commercial real estate sector expanding at a steady pace, SMREITs are positioned to become key contributors to market institutionalisation.

Why the MSMREIT Market Is Expanding Rapidly

The growth of the MSMREIT market is driven by several major shifts:

• Structured investment model: Mid-sized properties, which earlier operated under fragmented ownership, now fall under a transparent, regulated structure.
• Improved governance and ESG compliance: Institutional oversight raises standards in maintenance, environmental compliance, and asset management.
• Investor confidence: Increased transparency and regulatory monitoring reduce risk and attract a wider investor base.

Anshuman Magazine of CBRE notes that SMREITs are bringing “a scalable and transparent approach to fractional ownership,” enabling the sector to operate on par with global best practices.

Expert Views: Why SMREITs Are Becoming Essential

CBRE experts emphasise that SMREITs fill a critical gap between direct property ownership and large-scale REITs. Rami Kaushal highlights that the MSMREIT market provides access to mid-sized assets with stable rental yields and capital appreciation prospects, an attractive combination for long-term investors.

However, he cautions that navigating evolving regulations will be crucial for these structures to become a sustainable mainstay in India’s investment landscape.

SEBI’s Regulatory Push Is Accelerating Growth

The MSMREIT landscape gained clarity in 2024 when SEBI introduced a dedicated framework for Small and Medium REITs. The new regulations standardise disclosure norms, valuation practices, and operational transparency factors that significantly enhance investor protection.

This regulatory support has built confidence and opened the door for large-scale fractional ownership to move into mainstream investing.

How Investors Benefit from the MSMREIT Market

For investors, the MSMREIT market presents multiple advantages:

• Access to premium commercial real estate at low entry points
• Stable rental income from leased assets
• Capital appreciation over the long term
• Liquidity through listed units on exchanges
• Strong governance and transparency due to regulatory oversight

This democratisation of premium real estate investing is expected to significantly broaden participation across retail and institutional investors.

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How Developers Gain from SMREIT Structures

Developers, too, stand to benefit from the MSMREIT market. Mid-sized assets often lock in capital for years, but SMREITs offer:

• Faster capital recycling
• Improved cash flow for new development
• Access to diverse investor classes
• Better asset management through REIT-driven professional practices

As more developers embrace SMREITs, India’s real estate market could see efficient monetisation of assets that were previously difficult to institutionalise.

Future Outlook

With more eligible Grade A assets entering the pipeline and investors showing increasing appetite for regulated real estate products, the MSMREIT market is well-positioned for long-term expansion. From institutionalising mid-sized commercial properties to widening investment access, SMREITs could reshape India’s commercial real estate ecosystem over the coming decade.