In 2019, an office landlord in Bengaluru did something no South Asian property company had managed before: it turned a portfolio of glass-and-steel business parks into units that anyone with a brokerage account could buy. That was Embassy Office Parks, India’s first real estate investment trust. Six years later, India has four listed REITs worth more than Rs 1 trillion, and a regulator in Kathmandu is now asking whether Nepal should follow. In July 2026, the Securities Board of Nepal (SEBON) laid out a capital-market policy for the new fiscal year that, according to reporting on the plan, commits the board to drafting a legal framework for REITs and infrastructure investment trusts. There is intent, but no law yet, and the harder question is whether Nepal’s property market could actually fill a REIT if one existed.
Key Takeaways
- A REIT is a listed trust that owns income-producing property (offices, malls, warehouses, hotels) and passes most of its rent to unit holders. Worldwide there are 1,021 listed REITs across 42 countries, with a combined equity value of about $2 trillion at the end of 2024.
- India went from zero REITs in 2018 to four listed trusts whose combined market capitalization crossed Rs 1 trillion in July 2025. They manage over 128 million square feet of Grade A space and have paid unit holders more than Rs 228 billion since 2019.
- Nepal has none. SEBON’s FY2083/84 policy signals an intent to build a REIT and InvIT framework, but no draft securities law for trusts has been published.
- The appeal is real: Nepali households hold much of their wealth in illiquid land, and banks carry roughly Rs 2 trillion in real estate and construction exposure that a capital-market instrument could help diversify.
- The obstacles are bigger: no pass-through tax law, Nepal’s dual land-pricing problem that corrupts valuation, a thin stock of audited income-producing commercial property, and shallow secondary-market liquidity on NEPSE.
- A realistic first step is a single small office or retail REIT in Kathmandu, not a broad market. Even India’s “small and medium” REITs require a Rs 50 crore (roughly Rs 80 crore in Nepali terms) asset pool to list.
What a REIT actually is
A real estate investment trust pools money from many investors to buy and operate income-producing property, then distributes almost all of the rent it collects back to those investors. In the United States, a REIT must pay out at least 90 percent of its taxable income as dividends. In exchange, the trust itself is largely exempt from corporate tax, so rental income is taxed once, in the investor’s hands, rather than twice. That pass-through treatment is the whole engine. Without it, a REIT is just a property company with extra reporting costs, and the returns do not compete with a fixed deposit.
The second feature is liquidity. A building cannot be sold in an afternoon, but a REIT unit can. An investor who wants exposure to a Rs 10 billion office tower, but has only Rs 10,000 to commit, can own a sliver of it and sell that sliver on an exchange the next day. This is why regulators like REITs: they convert lumpy, illiquid real estate into standardized, tradable securities, and they force professional management, independent valuation, and audited accounts onto a sector that is often opaque. According to the industry body Nareit, US-listed REITs alone held an equity market capitalization of about $1.43 trillion as of February 2025.
How India built a REIT market from scratch
India is the most useful comparison because it started from the same place Nepal is in now: a property-obsessed economy with no REIT regime. The market regulator SEBI finalized REIT rules in 2014, but the first listing did not happen until 2019. Once it did, growth was fast. By the end of July 2025, India’s four REITs (Embassy Office Parks, Mindspace Business Parks, Brookfield India, and Nexus Select Trust) had a combined market capitalization above Rs 1 trillion, roughly Rs 1.63 trillion in gross assets, and distributions exceeding Rs 228 billion since inception.
The market kept widening. A fifth trust, Knowledge Realty Trust, listed in August 2025, and a CREDAI-Anarock report projects India’s REIT market could cross $25 billion in value by 2030, up from about $18 billion, as trusts move beyond offices into warehousing, retail, and data centers. India also created a lower tier: “small and medium” REITs, which can list a single asset pool of at least Rs 50 crore with a minimum investment of Rs 10 lakh per investor. The two-tier design matters for Nepal, because it shows a market does not have to begin with billion-dollar trusts. It can start small.
Why Nepal is talking about REITs now
SEBON is not starting from nothing. Under the Specialized Investment Fund Regulations issued in 2019, the board has already licensed fund managers to run private equity, venture capital, and hedge funds, with a minimum fund size of Rs 150 million and a minimum paid-up capital of Rs 20 million for the manager. That is the same regulatory plumbing, trusts, fund managers, unit holders, that a REIT runs on. SEBON’s capital-market policy for the new fiscal year, unveiled in mid-July 2026, leans further into product diversification, and reporting on the policy says it includes developing legal and institutional frameworks for REITs and InvITs so that, in the board’s framing, small investors can take part in large real estate and infrastructure projects with limited capital.
The timing is not accidental. NEPSE’s market capitalization sat around Rs 4.54 trillion in early 2025, but the exchange is overwhelmingly bank and insurance stock, with thin depth in anything else. Nepal’s entire mutual fund industry, about 46 schemes, holds only on the order of Rs 46 billion in listed equities. Regulators want new instruments to broaden a shallow market, and property is the obvious candidate in a country where land is the default store of value. For a sense of how Nepalis already weigh the choice, see our comparison of real estate versus NEPSE as an investment.
The case for REITs in Nepal
The strongest argument is about where Nepali wealth is trapped. A typical middle-class balance sheet is a house and a plot of land recorded on a lalpurja, assets that are almost impossible to partially sell or quickly convert to cash. A REIT would let a saver in Butwal own a professionally managed share of a Kathmandu office building for the price of a few units, collect rent as dividends, and exit whenever needed. That is a genuinely new option in a market where the realistic choices today are a full plot, a bank deposit, or NEPSE shares.
The second argument is about bank risk. As we reported in our analysis of NRB’s real estate data showing roughly Rs 2 trillion in property exposure, Nepal’s banks are heavily concentrated in land and construction lending. A REIT market would move some of that financing off bank balance sheets and into the capital market, where the risk is held by investors who chose it, not by depositors who did not. India’s experience suggests this can work in a South Asian emerging market within a few years, not decades. The appeal is not in doubt. The feasibility is.
Why it will be hard
Start with valuation, because a REIT lives or dies on a credible net asset value. Nepal has a well-documented dual land-pricing problem: an official government rate used for registration and tax, and a much higher market rate used in actual deals. We covered this in the valuation duplication trap. A trust cannot publish a trustworthy NAV, or let units trade fairly, when the underlying assets have two prices and neither is fully reliable. Independent, professional appraisal of commercial property is still immature here.
Next is tax. REITs only work with pass-through treatment, and Nepal’s tax code does not yet provide it. Without a law that prevents income from being taxed at both the trust and the investor level, a Nepali REIT would deliver after-tax yields too low to attract anyone. Writing that law, and protecting it from later reversal, is a prerequisite, not a detail.
Then there is the supply problem, which may be the deepest. A REIT needs a pool of institutional-grade, income-producing property with audited rent rolls and long leases. Nepal’s commercial stock is thin, fragmented, frequently owner-occupied, and often leased informally. We have documented how commercial leasing in Nepal runs on weak paperwork, which is exactly the opposite of what a trust needs to underwrite stable cash flows. Add a paper-heavy title and registration system, limited secondary-market liquidity on NEPSE, and real related-party risk when a handful of large developers would be the natural sponsors, and the gap between intent and a listable product is wide. For investors browsing what Nepal’s commercial and residential market actually looks like today, listing platforms such as Basobaas show a market still built around whole-unit sales, not securitized, income-producing assets.
What a realistic path looks like
A sensible sequence is clear even if the timeline is not. First, pass the enabling securities and tax legislation, including pass-through treatment and a dedicated REIT regulation under SEBON. Second, build the supporting market: a licensed independent valuation profession, a trustee framework, and disclosure standards. Third, start with one small, conservative trust, an SM-REIT-style vehicle anchored by a single well-leased office or retail asset in Kathmandu or Lalitpur, rather than attempting a broad market overnight. India needed five years between rules and its first listing, and it had deeper capital markets and a larger stock of Grade A property to begin with.
The honest conclusion is that REITs are a reasonable long-term modernization for Nepal, not a near-term fix. They could eventually channel household savings into professionally managed property and relieve the banking system’s property concentration. But the SEBON signal is the easy part. Until Nepal fixes how property is valued, taxed, titled, and leased, a REIT would have very little it could credibly hold. The policy intent is worth taking seriously. A listing is still years away. For more of our coverage, see the full BiznessVue real estate archive.
Frequently Asked Questions
Does Nepal have any REITs in 2026?
No. As of 2026, Nepal has no listed real estate investment trusts and no REIT law. SEBON’s capital-market policy for the new fiscal year signals an intent to develop a legal framework for REITs and infrastructure investment trusts, but no draft securities regulation for trusts has been published, and no vehicle exists to invest in yet.
What is a REIT and how does it make money for investors?
A REIT is a listed trust that owns income-producing property such as offices, malls, or warehouses. It collects rent and distributes most of that income, at least 90 percent of taxable income in the United States, to unit holders as dividends. Investors earn rental income without buying a whole building, and can buy or sell their units on a stock exchange for liquidity.
How big is India’s REIT market, and why does it matter for Nepal?
India’s four listed REITs crossed Rs 1 trillion in combined market capitalization in July 2025, managing over 128 million square feet and distributing more than Rs 228 billion to unit holders since 2019. India matters for Nepal because it shows a South Asian emerging market can build a REIT sector from zero within a few years, provided the tax, valuation, and disclosure rules are in place first.
What is stopping Nepal from launching REITs?
Four main barriers: there is no pass-through tax law, so income would be taxed twice; Nepal’s dual land-pricing system makes credible asset valuation difficult; the stock of audited, income-producing commercial property is thin and often informally leased; and NEPSE has limited secondary-market liquidity outside bank stocks. Each of these would need to be addressed before a REIT could realistically list.
How much money would an investor need to buy into a REIT?
That depends on the rules a country sets. Listed REIT units can trade for a few thousand rupees each, making them accessible to small investors. India’s “small and medium” REITs set a higher bar of Rs 10 lakh per investor and a Rs 50 crore minimum asset pool. Nepal has not set any thresholds yet, because no REIT regulation exists.
Are REITs safer than buying land directly in Nepal?
They are different, not simply safer. A REIT offers liquidity, professional management, and diversification across multiple properties, which direct land ownership does not. But a REIT carries market-price volatility, management and related-party risk, and dependence on reliable valuation and disclosure. In a market like Nepal with immature appraisal and governance standards, those risks would be material, which is why regulators plan to start cautiously.
