Real Estate as Inflation Hedge in India: A City-Level Comparison of Direct Property and REITs

Volume 11, Issue 2, 2026

International Journal of Commerce and Management Studies, ISSN 2456-3684

Paper Title

Author Name and Affiliation

Dr. Adil Jiwani

Assistant Professor, Department of Management Studies, Nabira Mahavidyalaya, Katol – 441302, Maharashtra, India, Emailid: adilajiwani@gmail.com

Abstract

Owing to the shift in interest rates in India, especially in the post-COVID period, investors have developed interest in real estate as an inflation hedge. This paper proposes an empirical test of whether Indian real estate, both direct residential property and listed real estate (REITs), protects investor returns against expected and unexpected inflation. Further, the paper also seeks to verify whether this protection varies across India’s major metropolitan housing markets. Building further on the Fama and Schwert (1977) framework and its direct application to India by Lee (2021), the study proposes two hypotheses and tests those on India-centric real estate data, using a regression and cointegration methodology based on NHB RESIDEX city indices and the Nifty REITs & Realty Index. The paper draws on reliable studies to frame the hypotheses and benchmark plausible outcomes, and concludes with portfolio-allocation implications relevant to globally acceptable alternative investment analysis in an Indian context.

Keywords

Inflation Hedging, Real Estate, REITs, India, Cointegration, Asset Allocation.

References

Bhavsar, V. (2023). Investigating house price diffusion across eight major cities of India. Journal of Housing and the Built Environment, 38, 1241-1261.
Bodie, Z. (1976). Common stocks as a hedge against inflation. Journal of Finance, 31(2), 459-470.
Dabara, D. I., Gbadegesin, J. T., Amidu, A.-R., Oyedokun, T. B., & Chiwuzie, A. (2026). Do REITs hedge inflation? Evidence from mature and emerging markets: A comparative analysis of the United States, United Kingdom, South Africa and Nigeria. Journal of Property Investment & Finance. https://doi.org/10.1080/09599916.2026.2653890
Fama, E. F., & Schwert, G. W. (1977). Asset returns and inflation. Journal of Financial Economics, 5(2), 115-146. https://doi.org/10.1016/0304-405X(77)90014-9
Glascock, J. L., Lu, C., & So, R. W. (2002). REIT returns and inflation: Perverse or reverse causality effects? Journal of Real Estate Finance and Economics, 24(3), 301-317.
Lee, H. K. N. (2021). The inflation hedging effectiveness of residential property: Evidence from three emerging Asian markets. International Real Estate Review, 24(2), 221-251.
Liu, C. H., Hartzell, D. J., & Hoesli, M. E. (1997). International evidence on real estate securities as an inflation hedge. Real Estate Economics, 25(2), 193-221.
Muckenhaupt, J., Hoesli, M., & Zhu, B. (2023). Listed real estate as an inflation hedge across regimes. Journal of Real Estate Finance and Economics, 70(2), 189-239. https://doi.org/10.1007/s11146-023-09964-x
Park, J. Y., Mullineaux, D. J., & Chew, I.-K. (1990). Are REITs inflation hedges? Journal of Real Estate Finance and Economics, 3(1), 91-103.
Rajesh, R., & Rath, D. P. (2023). House price convergence: Evidence from India. Asia-Pacific Journal of Regional Science, 7(3), 721-747.
Titman, S., & Warga, A. (1989). Stock returns as predictors of interest rates and inflation. Journal of Financial and Quantitative Analysis, 24(1), 47-58.
Wei, L., Cheng, W.-H., Lee, W.-Y., & Tsai, T.-H. (2025). Comparative analysis of real estate and stock markets as inflation hedges: Insights from East Asia and the United States. Journal of Emerging Market Finance, 24(4), 486-508.

DOI

DOI: https://doi.org/10.67061/ijcams.2026.vol.11.issue.02.80933

Download PDF