Budget 2026: FM Sitharaman proposes dedicated REITs to recycle public sector enterprises' land assets

Union FM Nirmala Sitharaman announced dedicated REITs for CPSE land assets

• Government plans REITs to monetise CPSE land assets for asset recycling
• India has five listed REITs with assets over Rs 2.3 lakh crore
• Railways hold 62,000 hectares of vacant land, 1,200 hectares given to RLDA

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Finance minister Nirmala Sitharaman announced in her Union Budget speech on February 1 that the government is proposing to set up real estate investment trusts (REITs) to recycle and monetise land assets held by central public sector enterprises (CPSEs).

If it comes to fruition, the move may help the government significantly push its asset monetisation plans, with participation of large funds and institutional investors, as the REITs segment reaches maturity and finds greater acceptance among retail investors as well, due to stable returns and quarterly distributions.

Investors have often called for the government, both and the Union and state level, to accelerate asset monetisation, with governments often having lucrative land parcels located in prime real estate markets.

India currently has five listed REITs- Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust, Nexus Select Trust, and Knowledge Realty Trust. Of the five, Nexus Select Trust is a primarily shopping mall-led REIT, while the other four are largely backed by office assets. According to the Indian REITs Association, the five REITs have a total gross asset value of more than Rs 2.3 lakh crore.

The CPSEs, as well as statutory bodies such as the Indian Railways, hold significant land assets across most major cities in India. A 2021 report by the Comptroller and Auditor General (CAG) of India highlighted major issues that has come in the way of public sector enterprises effectively monetising excess land assets. Those issues included legacy land use classifications, encroachments, poor coordination with other central agencies and state governments, and other bureaucratic delays and issues.

The railways have been one of the leaders among Union government ministries in monetising land assets, despite slow progress. The Rail Land Development Authority (RLDA) is in charge of monetising land assets, mainly through long-term lease agreements with private developers. A 2024 parliamentary report noted that the railways have around 62,000 hectares of vacant land, of which around 1,200 hectares have been handed over to the RLDA for development.