Knight Frank sees India’s REIT and InvIT market growing by 3-1/2 times in five years
September 09, 2025
REITs and InvITs are at a stage similar to where the mutual fund industry was five to seven years ago, said Rajeev Vijay of Knight Frank India, adding that investor education and awareness can be critical for growth.
India’s market for REITs and InvITs – investment vehicles that pool money into real estate and infra assets - could expand by 3-1/2 times by 2030, driven by surging office supply and penetration, stable yields of 12-16 percent on such properties, and an increasing institutional and foreign investor interest, according to Knight Frank India, a leading property consultant.
Rajeev Vijay, Executive Director - Government and Infrastructure Advisory at Knight Frank India told Moneycontrol that Infrastructure Investment Trusts (InvITs) are emerging as a high yield-generating asset for investors. “Real Estate Investment Trusts (REITs) and InvITs work like a yield structure where investors earn a regular income of 6-8 percent. On top of that, there can be an additional growth of 4-8 percent. So overall, investors can get returns of 12-16 percent from a largely yield-generating asset. That is attractive for any investor and one of the main reasons why foreign capital has moved into InvITs,” said Vijay.
The category is at a stage similar to India’s mutual fund industry five to seven years ago, Vijay added, where investor education and awareness can be critical for growth. “We are suggesting a similar kind of structure for InvITs also. There are two industry bodies that have been formed, one for InvITs and one for REITs, and they are working with different stakeholders to increase investor education,” he said.
A key differentiator for the asset class is the stability that it provides, as it is backed by operational projects. “In InvITs, the assets are already operational. These are income-generating assets bundled together. It is a cash flow business where volatility is low. That is why it is called a yield play,” Knight Frank India explained.
Rajeev Vijay also argued that simplifying taxation for REITs and InvITs could attract more retail participation. “For retail investors, if the taxation element can be simplified, you can get more and more people coming in. Even if the foreign portfolio investors have exited the stock market, the market has not fallen much largely because retail money is coming in. That same money can move into InvITs which provide regular yield without the risk of the stock market,” Vijay added.
Institutional participation too is expected to play a larger role in expanding the popularity of these assets, going forward. “We want more investments to come from domestic institutional investors - mutual funds, insurance companies, and pension houses. Unfortunately, Indian funds have not been able to participate much, while foreign pension funds from Canada, the Middle East and the US have already invested and earned good returns,” he said, adding that increasing investment limits for Indian mutual funds and insurers could create more demand.
On the supply side, InvITs have so far largely drawn from a pool of toll roads, power transmission and renewable energy projects, and according to Vijay, newer sectors could add depth here. “We are looking at newer sectors such as smart metering, airports, logistics, railways and data centres. Data centres definitely can come in even ahead of others as they are fast-growing, private sector-driven and have long-term leases,” he said.
While regulations around leveraging on debt and certain concession agreements remain hurdles, Knight Frank India said the market is maturing steadily. “It is the same story as equity markets. Once investors get educated, you start seeing much faster growth. InvITs may take another five to seven years to reach that maturity, but we are very confident this asset class will grow,” Rajeev Vijay added.