Reits and InvITs draw wealthy Indians seeking diversification

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Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are emerging as more attractive investment avenues, driven by a broader listed universe, a stronger pipeline and growing interest from wealthy Indians and family offices, say experts.

Returns have also accelerated, with the Nifty REITs & InvITs Index gaining 11% in 2024, 20% in 2025 and more than 47% so far in 2026.

“Family offices are moving towards Reits and InvITs, and this shift is being driven by the comfort that they are backed by real assets, regulatory supervision, with more than 80% of assets being revenue-generating, thus reducing construction risk, and the mandatory distribution of cash flows,” said Shravan Sreenivasula, executive director and head, investment solutions, Avendus Wealth Management.

He added that good experience with quarterly distributions and the increase in market prices have also contributed to this shift.

Family offices across the spectrum are now allocating to REITs and InvITs, primarily because traditional fixed income investments have become less attractive on a post-tax basis, Sreenivasula said.

The unitholder base of India's first listed Reit, Embassy Office Parks REIT, has expanded 34-fold over the past seven years, from around 4,000 at the time of listing to more than 135,000, according to its latest investor presentation.

Mindspace Business Parks REIT, too, reported a 40% year-on-year increase in the number of unitholders to 90,478 as of 31 December 2025.

Institutional interest is also rising, with mutual funds owning 25% of the units in Brookfield India Real Estate Trust.

On the other hand, despite their attractive yields, Reits and InvITs may not necessarily be signalling a shift away from debt, experts pointed out. Rather, investors are using them to complement traditional fixed-income allocations, adding an extra layer of income and diversification, they said.

Reits and InvITs are hybrid instruments that sit between debt and equity in an asset allocation framework, said Ashwin Patni, head, wealth management solutions at Julius Baer India.

While they are not a direct substitute for fixed income, investors favour them for their high, regular distributions, low beta, and low correlation with equities, making them strong complements to equity-heavy portfolios, he said.

Patni added that many Reits and InvITs offer tax-efficient distributions and low-double-digit internal rate of return, making them an attractive standalone investment option for family offices.

Unlike debt, they also provide an inflation hedge, helping them carve out a distinct niche in investor portfolios.

Beyond toll roads and commercial office assets, the market now offers themes such as renewable energy, malls, telecom towers, warehousing, and industrial parks, providing investors with greater diversification and the ability to take exposure to structural growth themes, he said.

“Equally important, we have seen several high-quality sponsors such as leading real estate developers, infrastructure operators and global investment managers bringing their offerings to market, which has added to the confidence of investors.”

Experts believe this is a good time to get in, as investor awareness is still in its early stages and distribution yields remain attractive in most cases. They also saw potential for capital appreciation over the next three years as more players enter the market.

Shishir Baijal, international partner, chairman and managing director, Knight Frank India, said the timing is favourable, given how rapidly the country's Reit and InvIT ecosystem has expanded in terms of both scale and asset diversity.

“The market represents over $100 billion in assets under management across commercial offices and retail property, roads, power transmission, renewable energy, telecom, infrastructure, and other sectors. Greater scale has improved ma...