The rising tide of institutional investment in India's REITs and InvITs

India’s real estate and infrastructure investment landscape is undergoing a quiet but significant transformation, with Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) emerging as increasingly attractive avenues for institutional investors. While still relatively young as a product category, Lighthouse Canton believes these vehicles are poised to mature and deliver robust returns, aligning closely with broader capital market trends.

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INSTITUTIONAL APPETITE GROWS FOR YIELD-DRIVEN PRODUCTS

According to Archit G. Executive Director, Capital Markets at Lighthouse Canton in India, the appeal of REITs and InvITs lies in their dual benefit: steady income streams and capital appreciation. “What is beneficial for REITs and InvITs is that they are backed by portfolios that throw off steady income,” said Garg. “They provide diversification beyond traditional equities and fixed income, offering both a fixed, steady income stream and a capital upside.”

Institutional players are at the forefront of this shift. Garg observed that while family offices are showing interest, the focus remains heavily skewed towards institutional investors, including insurance companies and pension funds, which are drawn to the stable yield these products offer. 

“It’s much more suited to institutional investors seeking stable returns. Over the last year, returns have ranged between 14% to 15%, which, if compared to Nifty’s returns over the same period, are higher,” he pointed out.

Interestingly, Garg highlighted the long-term potential of these vehicles to rival traditional equity market gains. “While Nifty might outperform in the long run, REITs and InvITs have the potential to deliver returns closer to Nifty over time. They can evolve into strong products, particularly for institutional players,” he added.

An article in the Indian daily Economic Times pointed out that fund-raising by REITs and InvITs in India rose to USD 2.05 billion in FY24. This is an increase from the historic low of USD 139 million in FY23, indicating the growing interest in these investment vehicles and their ability to raise capital on a large scale.

Read the entire article here: www.lighthouse-canton.com/insights/the-rising-tide-of-institutional-investment-in-indias-reits-and-invits