ETMarkets PMS Talk| REITs and InvITs poised for multi-decade structural growth in India, says Alt’s Rahul Jain

In the latest edition of ETMarkets PMS Talk, Rahul Jain, Head – Listed Products at Alt, highlights how REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) have rapidly evolved from niche instruments to a mainstream asset class for Indian HNIs.

Q) How are listed real assets like REITs and InvITs emerging as a distinct asset class for HNIs in India?

A) REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) have moved from niche instruments to mainstream investments within just six years of launch.

They now command a combined market capitalization of almost ₹4 trillion across listed REITs and InvITs, with some of the REITs having market capitalization equivalent to mid-cap stocks.

Importantly, they democratize ownership of institutional-grade commercial real estate and infrastructure assets that was earlier accessible only to developers, PE funds, or sovereign investors.

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For HNIs, they provide scaled exposure – e.g., participation in an IT park, national highway system, transmission lines – something not possible 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.Q) What unique advantages can a PMS framework unlock for investors in listed real assets?

A) Our latest offering ARIPS – Alt REIT InvIT PMS Strategy is India’s first and only PMS (Portfolio Management Service) dedicated to investing in units of listed Indian Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), giving investors access to India’s growing real estate and infrastructure assets.

Our 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 gives investors daily liquidity while maintaining exposure to real assets.

Q) How does India’s regulatory environment for REITs and InvITs compare with global peers?

A) India’s REIT/InvIT regulations are globally comparable, though still evolving:
● 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—most Indian REITs are still office-heavy, while in the U.S./Singapore, one can see healthcare, hospitality, logistics, and even data center REITs.

However, as per SEBI’s 2025 updates, India is opening up to logistics, data centers, and healthcare, bringing it closer to global benchmarks.

Q) With $100 billion of institutional-grade real estate and infra under management, what does the growth trajectory look like for this category?

A) 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.

Thus, this category is poised for multi-decade structural growth, mirroring the U.S. REIT trajectory.

Q) The investor base has surged 30x in just five years. What factors are driving this retail and HNI participation?

A) REIT unitholders have surged from 6,000 in 2019 to 260,000+ in 2025, and InvITs now have 280,000+ investors. Key drivers:
● 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 wave reflects a retailization of real assets, previously dominated by institutions. Infact, recent Knowledge Realty Trust’s IPO was oversubscribed highest among all the REITs till date at 12.5x

Q) REITs and InvITs now average ₹80 crore in daily trades and offer 8–10% quarterly yields. How do you see liquidity and returns shaping investor confidence?

A) 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 along with very low variation in quarterly distributions helps stabilize portfolios.

As more REITs and InvITs list, liquidity deepens and track records extend, investor confidence will increase

Q) With 33% lower volatility than Nifty, do listed real assets offer the best of both debt and equity?

A) 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 vs Nifty 50, with annualized returns (10–14%) which is in between both equities and bonds.

Q) Do you see listed real assets becoming a core allocation in HNI portfolios over the next 5–10 years?

A) Over the next 5–10 years, I expect listed real assets to become a core allocation in HNI portfolios:
● The asset class will expand beyond offices into logistics, data centers, healthcare, hospitality, and renewables, offering diversification.
● Potential re-categorisation of REITs/InvITs as equity (from hybrid currently) will bring in more liquidity as REITs become part of equity indices.
● Global index inclusions (FTSE EPRA/NAREIT, 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.
Hence, REITs and InvITs are set to graduate from satellite to core holdings, potentially making up 10–15% of HNI portfolios by 2030.

We believe that we are at an inflection point w.r.t. demand for REITs and InvITs and that was one of the primary reasons to launch India’s only PMS offering focussed on these asset classes now. ARIPS is built 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
● Diversification from equity and credit-heavy portfolios

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