India’s REITs and InvITs market could see a 3.5-fold growth by 2030, according to Knight Frank India.
These investment vehicles, which pool capital into income-generating real estate and infrastructure assets, are gaining popularity among investors for their stability and consistent returns.
Rajeev Vijay, Executive Director – Government and Infrastructure Advisory at Knight Frank India, stated that InvITs are emerging as a compelling high-yield option.
“REITs and InvITs operate on a yield structure where investors earn a steady income of 6–8%. Added to this is a potential capital appreciation of 4–8%, delivering overall returns of 12–16%,” Vijay explained.
This attractive return profile is drawing increased foreign capital into India’s infrastructure sector.
Parallels with the Mutual Fund Industry
Vijay likened the current stage of InvITs and REITs to that of India’s mutual fund industry five to seven years ago, where education and awareness played a pivotal role in its growth.
“Industry bodies have now been formed for both InvITs and REITs. They’re actively working with regulators and stakeholders to improve investor education,” he noted.
A key advantage of InvITs, according to Knight Frank India, is their stability. Unlike riskier equity assets, InvITs are supported by fully operational, income-generating projects.
“These are not speculative investments—they are backed by real assets with existing cash flows. That’s why we call it a ‘yield play’,” the firm added.
Vijay also emphasised that retail investor participation could increase if tax structures were simplified.
“Retail investors are driving resilience in the equity markets even when foreign funds exit. If taxation on InvITs is streamlined, more of this money could flow into yield-based instruments, reducing exposure to equity market volatility,” he said.
Institutional and Global Interest
The report highlighted that while foreign institutional investors, such as pension funds from Canada, the US, and the Middle East, have already gained exposure to these assets, Indian institutional participation remains limited.
Vijay suggested that relaxing investment limits for mutual funds and insurers could unlock significant domestic capital.
Until now, InvITs have largely consisted of toll roads, renewable energy, and power transmission assets.
However, Knight Frank anticipates that sectors like smart metering, data centres, airports, logistics, and railways will contribute to the next wave of growth.
“Data centres, in particular, are promising due to long-term leases and rapid digital demand,” Vijay stated.
Despite regulatory hurdles around debt and concessions, Knight Frank says the sector is steadily maturing.
“As investors become more informed, adoption will accelerate. InvITs and REITs are expected to mirror the success trajectory of India’s equity markets,” Vijay concluded.
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