REITs and InvITs: The Future of Real Estate and Infrastructure Investments in India
In the latest edition of ETMarkets PMS Talk, Rahul Jain, Head – Listed Products at Alt, discusses the rapid evolution of REITs and InvITs from niche instruments to a mainstream asset class for Indian HNIs. With a combined market capitalization of nearly ₹4 trillion, these listed real assets offer stable income, liquidity, and diversification.
REITs and InvITs now command a combined market capitalization of almost ₹4 trillion, with some REITs having market capitalization equivalent to mid-cap stocks. They democratize ownership of institutional-grade commercial real estate and infrastructure assets, which were previously accessible only to developers, private equity funds, or sovereign investors.
For HNIs, REITs and InvITs provide scaled exposure to assets such as IT parks, national highways, and transmission lines, which are not feasible through direct investing. This combination of stable income streams, lower volatility, and institutional-grade governance under SEBI has made them a distinct allocation class in HNI portfolios.
Alt's latest offering, the Alt REIT InvIT PMS Strategy (ARIPS), is India’s first and only Portfolio Management Service dedicated to investing in units of listed Indian REITs and InvITs. This PMS can unlock several advantages for investors in listed real assets:
- Active Curation : PMS managers can rotate between higher-yielding InvITs and more stable REITs depending on market conditions.
- Tax Efficiency & Timing : PMS can optimize entry/exit strategies around distribution cycles, capturing yield while deferring taxes.
- Diversification : PMS structures enable blending across office, retail, road, and power assets, mitigating sector concentration risks.
- Liquidity Management : Unlike blind-pool real estate funds, PMS in listed REITs/InvITs provides daily liquidity while maintaining exposure to real assets.
India’s regulatory environment for REITs and InvITs is globally comparable, though still evolving. Key features include:
- Mandatory Distributions : At least 90% of net distributable income must be paid out, similar to U.S. REITs.
- Asset Rules : 80–95% of assets must be in completed, income-generating projects, removing under-construction risk.
- Tax Pass-Through : Dividends (under certain conditions) and capital repayment are tax-free in investors’ hands.
- Accessibility : Lot sizes were reduced to a single unit (₹100–₹400 for REITs, ₹50–₹150 for InvITs), aligning with Singapore and U.S. practices.
Globally, India’s regime is still narrow in asset diversity, with most Indian REITs being office-heavy. However, SEBI’s 2025 updates are expected to open up to logistics, data centers, and healthcare, bringing India closer to global benchmarks.
As of 2025, India’s institutional-grade REIT and InvIT AUM is around $85-100 billion, across listed and unlisted structures. The government’s National Monetization Pipeline is expected to triple InvIT AUM to ₹21 trillion by FY2030 (~$250 bn). REITs own only a fifth of India’s Grade-A office stock (~175 million sq. ft. vs 850 million+ sq. ft. total), leaving significant headroom. SM REITs (Small & Medium REITs), launched in 2024, are expected to scale 10x by 2030 to $5 bn, giving HNIs fractional access to niche real estate opportunities.
The investor base has surged 30x in just five years, with REIT unitholders increasing from 6,000 in 2019 to 260,000+ in 2025, and InvITs now having 280,000+ investors. Key drivers include:
- Lower Entry Barriers : SEBI cut minimum subscription to a single unit.
- Stable Quarterly Distributions : 7–12% yields, appealing to income-seeking HNIs and retirees.
- Digital Access : Via brokers and wealth-tech platforms.
- Institutional Validation : From EPFO, mutual funds, and global pension funds.
This retailization of real assets, previously dominated by institutions, reflects a significant shift. REITs and InvITs now average ₹80 crore in daily trades and offer 8–10% quarterly yields. With average ₹80 crore in daily trading volumes, REITs and InvITs are approaching mid-cap stock liquidity. REITs are now regularly covered by analysts like mainstream stocks. Yields are attractive: 6-7% for REITs, 8-13% for InvITs, distributed quarterly. Low correlation with equities and very low variation in quarterly distributions help stabilize portfolios.
REITs/InvITs offer a unique middle ground:
- Debt-like Stability : Predictable distributions backed by rental/toll/tariff revenues.
- Equity-like Upside : Capital appreciation from rent/toll escalations, value accretive asset acquisitions, or re-rating.
Historical data shows 33% lower volatility compared to the Nifty 50, with annualized returns of 10–14%, which is between both equities and bonds.
Over the next 5–10 years, listed real assets are expected to become a core allocation in HNI portfolios:
- Asset Class Expansion : Beyond offices into logistics, data centers, healthcare, hospitality, and renewables.
- Potential Re-categorization : REITs/InvITs as equity (from hybrid currently) will bring more liquidity.
- Global Index Inclusions : FTSE EPRA/NAREIT and potential domestic index entry will increase passive inflows.
- PMS and Wealth Platforms : Will start packaging these into strategic HNI allocations, much like equities and fixed income.
REITs and InvITs are set to graduate from satellite to core holdings, potentially making up 10–15% of HNI portfolios by 2030. Alt believes that they are at an inflection point with demand for REITs and InvITs, which is why they launched India’s only PMS offering focused on these asset classes. ARIPS aims to institutionalize access to REITs and InvITs for Indian investors, offering the same risk-adjusted returns and portfolio stability that global institutions have tapped into for decades.
ARIPS aims to be the preferred vehicle for forward-looking investors who value passive income with downside protection, liquidity through listed vehicles, professional selection and active monitoring, and diversification from equity and credit-heavy portfolios.
Frequently Asked Questions
What are REITs and InvITs?
REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are investment vehicles that allow investors to pool their money to invest in real estate and infrastructure projects. They offer a way to gain exposure to institutional-grade assets with stable income streams and potential capital appreciation.
Why are REITs and InvITs becoming popular among HNIs in India?
REITs and InvITs are becoming popular among HNIs in India due to their stable quarterly distributions, lower volatility compared to equities, and the ability to provide scaled exposure to high-quality real estate and infrastructure assets. They offer a unique blend of stable income, liquidity, and diversification.
What is the current market capitalization of REITs and InvITs in India?
As of 2025, the combined market capitalization of REITs and InvITs in India is nearly ₹4 trillion, with some REITs having market capitalization equivalent to mid-cap stocks.
What are the key regulatory features of REITs and InvITs in India?
Key regulatory features include mandatory distributions of at least 90% of net distributable income, asset rules requiring 80–95% of assets to be in completed, income-generating projects, and tax pass-through, where dividends and capital repayment are tax-free in investors’ hands.
What is Alt's ARIPS PMS Strategy?
Alt's ARIPS (Alt REIT InvIT PMS Strategy) is India’s first and only Portfolio Management Service dedicated to investing in units of listed Indian REITs and InvITs. It offers active curation, tax efficiency, diversification, and liquidity management, making it a preferred vehicle for forward-looking investors.
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