The real estate investment landscape in India is undergoing a significant transformation, driven by technological advancements and evolving investor preferences. Three key trends—tokenization, fractionalization, and Small and Medium REITs (SM REITs)—are democratizing access to real estate, making it more accessible, liquid, and transparent.
Facts and Figures: Size of the Indian Market
1. Fractionalization: The fractional ownership market in India has seen substantial growth, surging from INR 1,500 crore in 2019 to INR 4,000 crore (approximately USD 480 million) in 2023 in terms of Assets Under Management (AUM), according to a TruBoard Partners report. It is projected to reach USD 8.9 billion by 2025, growing at a CAGR of 10.5% (Knight Frank report, 2020 projection).
TruBoard Partners anticipates a 25-30% compounded annual growth rate (CAGR) in the AUM of the fractional ownership market over the next 4-5 years. The minimum investment threshold for fractional ownership can be as low as INR 10 lakhs, making it accessible to a broader range of retail investors.
2. SM REITs (Small and Medium REITs): SM REITs are a newer, regulated form of fractional ownership, brought under SEBIs purview in March 2024. They allow investment in properties valued between INR 50 crore and INR 499 crore. The potential market size for SM REITs in India is expected to exceed USD 60 billion (or over 350 million sq. ft. of office space) by 2026, according to a CBRE report.
Mumbai alone leads with approximately 75 million sq ft of potential SM REIT-ready completed office stock as of June 2024. The minimum investment for SM REITs is now as low as INR 10 lakhs, significantly democratizing access to professionally managed, income-generating real estate. As of early 2025, there are a few SEBI-registered SM REITs, with Property Share Investment Trust (PSIT) being one of the first to list.
3. Tokenization: While fractionalization and SM REITs are gaining ground, direct real estate tokenization (using blockchain to represent property ownership) is still in its nascent stages in India due to regulatory complexities surrounding digital assets and land records. Globally, the tokenized real estate market is expected to grow dramatically, with Deloitte predicting that US$4 trillion of real estate will be tokenized by 2035, up from less than US$0.3 trillion in 2024.
In India, the International Financial Services Centres Authority (IFSCA) in GIFT City is actively exploring regulatory frameworks for asset tokenization, including real estate, to foster a digital asset ecosystem. An expert committee on asset tokenization was constituted in September 2023 to formulate regulations. Some private initiatives are exploring tokenized equity and debt for global data center property investments, with one India-based investor unveiling a US$1 billion fund. However, widespread legal recognition and adoption for direct property tokenization in the domestic market are still evolving.
