India First is launching a new index fund tracking the Nifty REITs & Realty Index, which allocates 60% to listed Real Estate Investment Trusts. This fund aims to tap into India's REIT market, projected to hit $25 billion by 2030, offering investors a mix of commercial real estate and realty stocks.
The Indian real estate investment landscape is set for a change with the launch of the India First Index Fund. This new financial product is designed to track the Nifty REITs & Realty Index, providing investors with a structured way to access the commercial real estate sector. The index itself is currently balanced with a 60% allocation toward five listed Real Estate Investment Trusts (REITs) and a 40% allocation in major real estate companies.
Accessing Commercial Real Estate
REITs function by owning and managing income-generating properties, such as office spaces and data centers, and distributing the rental income to shareholders as dividends. For individual investors, these trusts offer a way to gain exposure to high-value commercial assets that are typically expensive to buy directly. The sector has shown stable income potential, with current listed REITs in India reporting weighted average lease expiries—a measure of how long tenants are committed to renting—between 6 and 8 years. This suggests a level of predictability in cash flows for these entities.
Regulatory Changes and Market Growth
Industry estimates suggest the Indian REIT market, which has a current market capitalization of roughly $19 billion, could grow to $25 billion by 2030. This growth is supported by a more mature regulatory environment overseen by the Securities and Exchange Board of India (SEBI). A significant recent shift occurred on January 1, 2026, when REITs were officially reclassified as 'Equity Related Instruments' in India. This change aligns the local framework more closely with international investment standards and is intended to improve clarity for investors.
Tax Structure and Risk Considerations
One of the main features attracting investors to the REIT model is the pass-through tax status, where income is generally taxed at the investor level rather than at the trust level. However, investors should be aware that returns are not guaranteed. While historical distribution yields have ranged between 5% and 7% annually, the actual performance of the India First Index Fund will depend on the rental growth, property valuations, and the financial health of the tenants within the REIT portfolios. Furthermore, since the index includes a 40% allocation to real estate companies, the fund's performance will also be influenced by the cyclical nature of the broader property market, including residential demand and debt levels of individual developers. The fund manager intends to adjust the allocation between REITs and realty stocks as more REITs list on the exchanges in the future.