India's REIT, InvIT market likely to add Rs 11.6 lakh crore investments over five years
New Delhi, June 16
India's real estate investment trust and infrastructure investment trust market could unlock an additional investment pool of Rs 11.6 lakh crore over the next five years and surpass Rs 20 lakh crore of assets under management by 2030, a report said on Tuesday.
The report from investment bank Avendus Capital said domestic mutual funds and insurance firms could deploy about Rs 4.6 lakh crore and Rs 3.2 lakh crore respectively by 2030. Meanwhile, domestic pension funds are expected to add roughly Rs 2.2 lakh crore.
Cumulatively, domestic institutional investors have utilised only 7.5 per cent of their existing regulatory limits for investing in REITs and InvITs, implying an incremental opportunity of about Rs 7 lakh crore.
On the supply side, roads, office, retail, transmission, renewables, telecom and logistics infrastructure are expected to double their total addressable market (TAM) by 2030 from Rs 10 lakh crore in 2026, the report added.
At 1.5 per cent of GDP, India's REIT and InvIT market remains underpenetrated compared to mature markets such as the United States, Australia, Singapore and Japan, where business trusts account for 5 per cent to 12 per cent of GDP.
"India's REIT and InvIT market is in the ninth year of its multi‑decadal growth journey, with 32 listed trusts currently representing an AUM of Rs 10 lakh crore and a combined market capitalisation of Rs 5 lakh crore," said Gaurav Sood, Managing Director and Head, Equity Capital Markets, Avendus Capital.
As investors globally are reassessing portfolio construction amid structurally higher interest rates, income-generating structures such as REITs and InvITs are emerging as one of the most significant long-term opportunities in India's capital markets, he added.
Gaurav Arora, Managing Director and Head, Infrastructure & Real Assets Investment Banking, Avendus Capital said that REITs and InvITs are uniquely positioned to financialise cash-generating core assets and recycle capital to develop the next generation of projects.
New investment avenues will further broaden participation, the report said, adding passive ETF products could bring in over Rs 240 billion with just a 2 per cent incremental allocation to the asset class.
— IANS
Reader Comments
Rs 11.6 lakh crore is a staggering amount! But I wish the report also addressed how small investors like us can participate meaningfully. Right now, the minimum investment amounts and knowledge barriers are quite high. The comparison with US and Singapore markets shows we have a long way to go in terms of democratizing access.
This is exciting! The infrastructure growth story in India is real - roads, renewables, telecom, logistics all expanding rapidly. REITs and InvITs are perfect instruments to capture that growth. My only concern is about the regulatory framework - the 7.5% limit utilization suggests either awareness or trust issues among institutional investors. Hope SEBI addresses this.
Maturing as an economy indeed! 🇮🇳 The fact that domestic mutual funds and insurers could deploy Rs 4.6 lakh crore and Rs 3.2 lakh crore respectively is a massive vote of confidence. But we need to be careful about valuation - not all InvITs have performed as expected. Investors should do their due diligence before jumping in.
As someone who has invested in a couple of InvITs, I can say the returns have been decent but not spectacular. The report mentions income-generating structures in a higher interest rate environment - that makes sense. However, liquidity and exit options need improvement. Also, more education for retail investors is crucial.
Good to see the government pushing infrastructure investments through these instruments. The TAM doubling from Rs 10 lakh crore to Rs 20 lakh crore by 2030 shows the potential. But let's not forget the execution risks - delays in road projects or regulatory changes can impact returns.
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