REIT Stocks Skyrocket 16-28%: How Lower Interest Rates Are Boosting Investor Returns

India's listed Real Estate Investment Trusts (REITs) have seen a remarkable year, with unit prices surging between 16-28% and outperforming many blue-chip stocks and the broader equity market. This significant price movement is particularly noteworthy, given that REITs are generally considered hybrid instruments driven by dividend payouts and tend to have less volatile price movements compared to equities.

What's Behind the Surge in REIT Prices?

The yields of the four listed REITs have fallen by about 35 basis points, from 6.5% in 2024 to 6.25% in 2025. Despite this, the yields in 2025 were on par with those in 2023. Market experts attribute the surge in REIT prices to a rerating of these instruments in 2025, triggered by lowering interest rates. Lower interest rates are considered a positive factor for REITs, as they are capital-intensive businesses that frequently avail loans and debt funding, and any decrease in interest rates would make financing cheaper for them, thereby boosting their bottom line.

REIT Performance in 2025

Some of the key performers in the REIT space in 2025 include:

• Mindspace REIT, which saw its unit value surge 28.5% in 2025, with its yield remaining unchanged at 5.9%.
• Brookfield India REIT, which witnessed a 20% appreciation in unit value, although its yield fell from 7.4% in 2024 to 6.8% in 2025.
• Nexus Select Trust, which saw its unit price increase by 20%, with its yield falling to 5.8%.
• Embassy's REIT units, which went up by 17% in price terms during 2025, with yields falling by 40 basis points to 6.1%.

Expert Insights

Market experts expect this outperformance of REITs to continue, provided interest rates remain low. Sakshi Suri, Executive Director, Valuation & Advisory Services, Cushman & Wakefield, expects this positive trend to continue, supported by strong office market fundamentals and sustained growth in GCC demand. Regulatory changes have significantly supported the uptick in REIT investors, with the reduction in repo rate by the central government further supporting the fundamentals of REITs by substantially decreasing debt cost.

Amar Ranu, Head - Investment Products & Insights, Anand Rathi Share & Stock Brokers Limited, notes that the recent rise in REIT unit prices is driven by a combination of structural, macro, and fundamental factors, including the 125-bps decline in interest rates, which has lowered discount rates, leading to valuation re-rating and multiple expansion for long-duration cash flows.

Investor Takeaway

Remember, this is perspective, not prediction. Do your own research and consider your own financial situation before making any investment decisions. The rise in REIT unit prices in 2025 has clearly stood out, especially when compared to the largely range-bound movement seen over the last few years. With lower interest rates providing an additional advantage to REITs, and their yield spread compared to benchmark interest rates surging, REITs are becoming increasingly attractive to investors seeking stable income-generating assets that also provide a hedge against inflation.