Finance Minister Nirmala Sitharaman in her Union Budget speech on February 1, proposed accelerating the monetisation of real estate assets held by central public sector enterprises (CPSEs) through the setting up of dedicated Real Estate Investment Trusts (REITs), as the government looks to recycle capital locked in mature public assets.
“Over the years, REITs have emerged as a successful instrument for asset monetisation. I propose to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs,” said FM.
Sitharaman added that during the past decade, the government undertook several initiatives for large-scale enhancement of public infrastructure including through new financing instruments such as Infrastructure Investment Trusts and REITs and institutions like NIIF and NABFID.
“We shall continue to focus on developing infrastructure in cities with over five lakh population in tier-II and tier-III cities which have expanded to become growth centres,” Sitharaman added.
India currently has five listed REITs: Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust (BIRET), Nexus Select Trust and Knowledge Realty Trust. Of these, Nexus Select Trust is the only retail-focused REIT, while the remaining trusts are focused on commercial office assets.
“Cities are India’s engines of growth, innovation, and opportunities. We shall now focus on tier-II and tier-III cities, and even temple-towns, which need modern infrastructure and basic amenities. This Budget aims to further amplify the potential of cities to deliver the economic power of agglomerations by mapping city economic regions (CER), based on their specific growth drivers,” said Sitharaman.
FM Sitharaman added that an allocation of ₹5,000 crore per CER over five years is proposed for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism.
According to Suprio Banerjee, vice-president and co-group head, ICRA, new financing mechanisms such as an Infrastructure Risk Guarantee Fund, CPSE REITs and incentives for municipal bonds should improve project bankability and crowd-in private capital, supporting a more sustainable capex cycle.
“The 11 per cent y‑o‑y rise in capital outlay to ₹12.2 lakh crore will support sustained execution momentum for the infrastructure sector. In line with historical trends, road and railways ministries continue to account for the bulk of proposed capital outlay in FY27 BE,” said Banerjee.
He added that the increased interest free loan support to states will aid project awards in roads, water supply, urban development, and public buildings.
