India's REIT and InvIT Market Poised to Reach Rs 20 Trillion by 2030

New Delhi

India's Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) market is on track to attract an additional investment pool of about Rs 11.6 trillion by 2030. According to a report by Avendus Capital, assets under management (AUM) are expected to surpass Rs 20 trillion during the same period. The report, titled 'Trust the Structure: REITs, InvITs and the Real Return Imperative', highlights the rapid growth of India's listed real assets ecosystem over the past decade.

In just nine years, India's REIT and InvIT market has scaled to nearly Rs 10 trillion of assets under management and approximately Rs 5 trillion of market capitalisation. However, the next phase of growth could be even more substantial. 'By 2030, the asset class could be supported by an additional investment pool of approximately Rs 11.6 trillion across mutual funds, insurance companies, pension funds, foreign investors, retail investors, and corporate treasuries,' the report stated.

The report further estimates that REITs and InvITs themselves could surpass Rs 20 trillion of assets under management by 2030, driven by growth across existing real estate and infrastructure sectors. It also highlights the potential for an annual primary market opportunity exceeding Rs 1 trillion, underscoring the significant capital formation these investment structures can facilitate.

Currently, India's REIT and InvIT AUM stands at around Rs 10 trillion, comprising approximately Rs 2.97 trillion in REIT assets and Rs 7.13 trillion in InvIT assets. Despite this growth, India's business trust market remains significantly underpenetrated compared to mature global markets. While India's REIT and InvIT market capitalisation represents only about 1.5 per cent of GDP, the ratio stands between 5 per cent and 12 per cent in several developed markets.

The report identifies several strong growth drivers for the sector, including India's infrastructure expansion, rising financialisation of household savings, regulatory reforms, and increasing participation from institutional investors. India's domestic long-duration institutional capital pool has utilised only about 7.5 per cent of the available regulatory limits for investments in REITs and InvITs. 'Full utilisation could redirect ~Rs 7 trillion worth of additional flows, which is ~2.6x of the current free float market cap of all REITs and InvITs,' the report noted.

The government's infrastructure development push is another major catalyst for InvIT growth. India requires massive long-duration capital to support its infrastructure ambitions, with the National Infrastructure Pipeline 2.0 envisioning around Rs 17 trillion of projects between FY25 and FY28. 'India needs infrastructure at a scale that government budgets alone cannot fund; the role of InvITs is critical in the proper recycling and allocation of capital,' the report stated.

Looking ahead, Avendus predicts that commercial office REITs could grow from an AUM of Rs 2.9 trillion in 2026 to Rs 6 trillion by 2030, while road InvITs could expand from Rs 3.2 trillion to Rs 8.8 trillion over the same period. 'Our belief is that India is still in the early stages of building a deep and institutionalised listed real assets market. As the ecosystem matures, the role of REITs and InvITs within strategic asset allocation is likely to become increasingly significant,' the report concluded.