Budget 2026 has proposed 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 on 1 February, Finance Minister Nirmala Sitharaman said that REITs have emerged as a successful tool for asset monetisation and that the government plans to leverage them to unlock the value of significant CPSE real estate holdings.
Real estate experts say pooling government-owned land and properties into REITs could unlock large, prime assets in key cities. For retail investors, this could open up access to high-quality, income-generating real estate, offering the twin benefits of regular yields and potential long-term appreciation, along with liquidity through listed markets.
By setting up dedicated REITs for CPSE-owned properties, the government aims to monetise high-value real estate more efficiently. For investors, this could open the door to high-quality commercial assets that were previously difficult to access. Experts note that CPSE properties are typically well-located, professionally managed, and backed by stable tenant profiles, making them appealing to long-term, income-focused investors.
CPSEs hold significant land and property assets identified for monetisation under the National Asset Monetisation Pipeline. With REIT structures capable of attracting large pools of capital and institutional participation, the initiative could help the government speed up its asset monetisation programme.
For retail investors, such REITs offer multiple benefits, including portfolio diversification beyond equities and bonds, relatively predictable rental income, and the potential for tax-efficient returns. Additionally, government backing could lower perceived risk compared with private commercial developments, experts say.
What the Budget 2026 proposal means
“The decision to include assets of CPSEs into the 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.
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.
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, strengthen the pipeline for long-term institutional capital across real estate and infrastructure,” added Ramesh Nair, managing director and CEO, Mindspace Business Parks REIT.
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.
