NEW DELHI: India’s Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) markets are projected to draw an additional ₹11.6 lakh crore in investments over the next five years. This would result in total assets under management exceeding ₹20 lakh crore by 2030, according to an Avendus Capital report.
The report notes that the market currently includes 32 listed trusts with assets under management of approximately ₹10 lakh crore and a total market capitalisation of around ₹5 lakh crore.
Domestic institutional investors are anticipated to be a key source of funding for this asset class. The report suggests that domestic mutual funds may allocate about ₹4.6 lakh crore, while insurance companies could contribute around ₹3.2 lakh crore into REITs and InvITs by 2030.
Additionally, domestic pension funds could invest approximately ₹2.2 lakh crore within the same timeframe. It is noteworthy that domestic institutional investors have utilized only 7.5% of their existing regulatory investment limits for REITs and InvITs, revealing an incremental investment potential of around ₹7 lakh crore.
On the supply front, the report indicates that sectors such as roads, offices, retail, transmission, renewables, telecommunications, and logistics infrastructure are expected to double their total addressable market from about ₹10 lakh crore in 2026 to 2030.
Currently, India’s REIT and InvIT market constitutes roughly 1.5% of GDP, which is significantly lower than more developed markets such as the United States, Australia, Singapore, and Japan, where similar structures account for 5-12% of GDP.
“India’s REIT and InvIT market is in the ninth year of sustained growth, featuring 32 listed trusts with an AUM of ₹10 lakh crore and a combined market capitalisation of ₹5 lakh crore,” stated Gaurav Sood, Managing Director and Head of Equity Capital Markets at Avendus Capital.
Investors are expected to evaluate REITs and InvITs not only based on distribution yields but also via equity internal rate of return (IRR), which typically trends at a premium of 200-700 basis points over the 10-year government security yield in a long-term scenario.
Long-term returns are influenced by factors such as current distributions, entry valuations, distribution growth, net asset value changes, and terminal value.
Moreover, the report suggests that passive exchange-traded fund products might bring in over ₹24,000 crore if there is a 2% incremental allocation to this asset class. Potential global index inclusion could unlock more than ₹1 lakh crore in the next five years.
Foreign institutional investors, retail investors, high-net-worth individuals, and family offices are projected to invest an additional ₹1.5 lakh crore by 2030, the report indicates.
