Indian investors are increasingly turning to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as avenues for stable returns and capital appreciation. Fundraising through these trusts saw a significant surge, reaching INR 17,116 crore (USD 2.7 billion) in the fiscal year 2023-24, an increase from the previous year's INR 1,166 crore (USD 18.2 million). SEBI's regulatory changes, such as reducing minimum lot sizes and allowing bank loans for purchases, have facilitated easier access to these investment options. Additionally, the government's focus on infrastructure development provides a steady pipeline of assets for InvITs, appealing to investors seeking stable returns. SEBI's amendments enabling fractional ownership through Small and Medium (SM) REITs further democratize real estate investment, potentially growing the market to over USD 5 billion by 2030.
Indian investors are discovering a new and exciting way to invest - Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). These investment vehicles allow you to participate in real estate and infrastructure projects, potentially generating stable returns and capital appreciation.
This trend is reflected in a significant rise in fundraising through REITs and InvITs. In the recent fiscal year (2023-24), a staggering INR 17,116 crore (USD 2.7 billion) was raised, a massive 14-fold increase compared to the previous year with only INR 1,166 crore (USD 18.2 million) raised. Experts predict this positive outlook will continue, fuelled by recent regulatory changes and a growing demand for stable income.
The Securities and Exchange Board of India (SEBI) has been actively making it easier to invest in these trusts. This includes allowing smaller investments by reducing the minimum lot size, permitting bank loans for purchase, and increasing the leverage ratio for InvITs to 70%.
The Indian government's focus on infrastructure development creates a steady stream of potential assets for InvITs. This is particularly attractive to investors seeking stable returns backed by reliable infrastructure projects like highways and power plants.
SEBI's recent amendments open doors for fractional ownership in real estate through Small and Medium (SM) REITs. This could potentially unlock a massive market, with projections suggesting a growth from USD 500 million to over USD 5 billion in Assets Under Management (AUM) by 2030. This allows even smaller investors to participate in the real estate market with a lower initial investment.
Both REITs and InvITs are required to distribute a significant portion of their income to investors, making them an attractive option for those seeking regular returns on their investments.
Since their introduction in 2014, REITs and InvITs have witnessed remarkable growth. Currently, there are 24 registered InvITs and 5 REITs, managing assets exceeding INR 5.5 lakh crore (USD 86 billion). This growth is expected to continue, with the road sector alone expected to attract a significant portion of future investments due to the government's infrastructure push of INR 17,116 crore (USD 2.7 billion) raised in the last fiscal year.
REITs and InvITs offer a unique opportunity for Indian investors to participate in the growth of real estate and infrastructure sectors. With regulatory support, a focus on infrastructure development, and the potential for attractive returns, these investment vehicles are poised to play a major role in the Indian investment landscape.
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