Small and Medium Real Estate Investment Trust (SM REITs) is the current investment instrument in India’s office real estate market to cater to the needs of Global capability Centres (GCC). SM REIT’s serve as the sweet spot between the traditional REIT’s and direct ownership making it an attractive investment opportunity for retail investors.
The SM REIT has been designed as a simple three tiered structure making it easier for the retail investors. The first tier involves the property also known as Special purpose vehicle(SPV) which directly owns the income generating real estate asset. The second tier is a trust which holds the complete 100% of the SPV to pool investor’s funds. The third tier is the investor who in return receives 100% of the net distributable cash flows from the trust. An investment manager is appointed with a net worth of minimum INR 20 crore and at least INR 10 crore as liquid net worth with a proven track record. Also the independent directors associated with the SM REIT are not to be involved with any other REITs to maintain transparency.
With the Indian office real estate market undergoing a paradigm shift, demand for startups and flexible and collaborative workspaces is constantly growing. Around 59.6 million sq ft of office space was leased which is the highest ever recorded for the first 9 months of the year 2025.In addition to that around 13.6 million sq ft of new development registrations were registered in the last quarter of 2025. As domestic corporations expand and GCC continues to scale up their operations, the current office space needs to be equipped with sustainable office developments with innovative trends like Artificial intelligence (AI), Building information modelling (BIM). Most of these innovations require significant capital pooling. SM REITs has proved itself as the most promising investment instrument to close this crucial gap.
As per CBRE’s report, Indian SM REIT market potential is expected to exceed 75 billion equivalent to 500 million sq ft of eligible office, logistics and retails assets.With an asset pool of INR 50 – INR 500 crore, retail investors can invest a minimum amount of INR 10 lakh. Even though this entry point is higher than REITs, it’s much lower than direct property ownership. With the notification from SEBI in March 2024, SM REITs has gained trust and has made real estate investments accessible to a broader range of investors including the affluent middle class.
As the Indian office real estate market is embracing this change, mid-sized investment grade( 0.1 – 1 million sq ft) existing office developments, upcoming office assets of 60 million sq ft that were originally illiquid assets are being brought back into the market by turning them into liquid financial instruments by pooling capital. Currently over INR 6.25 lakh crore of Indian assets are eligible under this category. With SEBI strict governance rules such as quarterly disclosures and investment in only completed projects along with transparency such as audited financials, and property valuation disclosures ensures accountability to the investors.
Therefore SM REITs and GCC are interdependent on each other for a sustained economic growth. As India continues to expand the real estate investment base to facilitate GCC, it is imperative to strengthen SM REITs, that will give GCC’s a plethora of options and ensure penetration into Tier II and Tier II cities in order to make India a major player in the global economy.
https://www.cbre.co.in/insights/articles/the-role-of-real-estate-in-supporting-gcc-growth
https://housivity.com/blog/how-sm-reits-are-transforming-real-estate-investment-in-india
https://hbits.co/knowledge-hub/blogs/sm-reits-vs-regular-reits
https://www.propertyshare.in/knowledge-centre/article/how-to-invest-in-sm-reits