REITs and InvITs in India: The Definitive Guide for Serious Investors (2026)
Most Indian investors can tell you the P/E ratio of TCS. Far fewer can explain how a REIT generates returns — or why InvITs quietly delivered 25.48% total returns in 2025, outpacing the Nifty 50's 11.88%. This is the definitive guide...
Most Indian investors can tell you the P/E ratio of TCS. Far fewer can explain how a REIT generates returns — or why InvITs quietly delivered 25.48% total returns in 2025, outpacing the Nifty 50's 11.88% by a wide margin.
REITs and InvITs sit in a strange blind spot. They're listed on exchanges. They distribute income quarterly. They're backed by real, income-generating assets — office parks, toll roads, transmission lines, shopping malls. Yet most investors treat them as exotic instruments, lumping them somewhere between real estate and bonds without understanding either the structure or the opportunity.
This piece is our attempt to fix that. It covers everything — the plumbing, the regulations, the track record, the evaluation framework, the global context — distilled into plain language with the data that actually matters.
Let's start from the ground up.
Part 1: What Exactly Are REITs and InvITs?
A Real Estate Investment Trust (REIT) is a SEBI-regulated trust that pools investor capital to own and operate income-generating commercial real estate — primarily Grade-A office parks and shopping malls in India's case. Instead of buying a ₹500 crore office building, you buy units of a trust that owns dozens of such buildings. The trust collects rent, pays operating expenses, services debt, and distributes at least 90% of its net distributable cash flows to you, the unitholder, every quarter.
An Infrastructure Investment Trust (InvIT) works identically in structure, but the underlying assets are infrastructure — toll roads, power transmission lines, gas pipelines, telecom towers. The income comes from tolls, tariffs, annuity payments, or availability-based contracts rather than rent.
Both operate as pass-through entities under Indian tax law. Income flows from the underlying Special Purpose Vehicles (SPVs) through the trust to you, avoiding the double taxation that plagues most corporate structures.
Here's the visual architecture:
| Layer | REIT | InvIT |
|---|---|---|
| Investor | Buys units on NSE/BSE | Buys units on NSE/BSE |
| Trust | SEBI-registered REIT | SEBI-registered InvIT |
| SPVs | Own individual properties | Own individual infra projects |
| Assets | Office parks, malls, data centres | Toll roads, transmission lines, pipelines |
| Revenue | Rental income | Tolls, tariffs, annuity payments |
| Distribution | 90% of net cash flows, quarterly | 90% of net cash flows, quarterly/semi-annually |
| Max leverage | 49% of asset value | 70% of asset value |
| Min completed assets | 80% of value | 80% of value |
Source: SEBI REIT Regulations 2014, SEBI InvIT Regulations 2014
The key insight most investors miss: your total return comes from two sources — the quarterly distribution (yield) and unit price appreciation (capital gains). This dual-return structure makes REITs and InvITs behave differently from both equities and bonds, which is precisely what makes them interesting from a portfolio construction standpoint.
Part 2: How Regulations Have Evolved — A Decade of Institutional Learning
India's REIT/InvIT journey is a case study in regulatory iteration. SEBI didn't get everything right on day one — and to their credit, they kept refining.
| Year | Regulatory Milestone | Significance |
|---|---|---|
| 2014 | SEBI notifies REIT and InvIT Regulations | Legal framework created. Min asset size ₹500 Cr for REITs. Min investment ~₹2 lakh. |
| 2017 | IRB InvIT Fund lists — India's first public InvIT | Proof of concept for toll road InvIT model |
| 2019 | Embassy REIT lists — India's first public REIT. Min subscription reduced to ₹50,000 | Commercial real estate becomes investable for HNIs. Min lot size: 100 units |
| 2020 | Mindspace REIT lists | Second office REIT. Listed during COVID uncertainty |
| 2021 | Min subscription cut to ₹10,000–15,000. Lot size reduced to 1 unit. Brookfield REIT and PowerGrid InvIT list | Game-changer for retail access. REITs become as easy to buy as stocks |
| 2023 | Nexus Select Trust lists (India's first retail REIT). SM REIT framework introduced. Nifty REITs & InvITs Index launched | Retail mall REIT. Fractional ownership platforms brought under SEBI purview. Benchmarking enabled |
| 2024 | SM REIT regulations refined. Indus Infra Trust (road InvIT) lists. Capital Infra Trust and IndiGrid expand | SM REITs target ₹50–500 Cr assets. More road InvITs enter the market |
| 2025 | Knowledge Realty Trust (KRT) lists — largest office REIT by GAV. SEBI reclassifies REITs as equity instruments (effective Jan 1, 2026). Min private InvIT subscription cut to ₹25 lakh. RBI cuts repo rate 125 bps to 5.25% | Watershed year. Mutual funds can now treat REIT exposure as equity allocation. Rate cuts boost REIT/InvIT valuations and cash flows |
| 2026 | REIT reclassification as equity takes effect. SM REIT listings expected. Potential logistics REIT and power transmission InvIT IPOs | Wider mutual fund participation. Possible equity index inclusion. Investable universe continues expanding |
Source: SEBI notifications, NSE, industry filings
The January 2026 reclassification of REITs as equity instruments deserves special attention. Until 2025, mutual funds could only hold REIT units within their "other" or hybrid allocation buckets — severely limiting institutional participation and liquidity. Now, equity-oriented mutual funds, balanced advantage funds, and the new Specialised Investment Funds (SIFs) can all count REIT holdings as part of their equity allocation. This single regulatory change could meaningfully increase institutional demand and trading volumes over the next 12–24 months.
InvITs continue to be classified as hybrid instruments for now, but there's industry expectation of a similar reclassification in the future.
Part 3: Who's Listed — The Complete Landscape
As of February 2026, India has 5 publicly listed REITs and 5 publicly listed InvITs, with an additional 21+ privately placed InvITs. Collectively, listed REITs and InvITs manage real assets exceeding ₹8.5 lakh crore in value.
Listed REITs
| REIT | Sponsor | Asset Type | Listed | Portfolio (msf) | Occupancy | Approx. Market Cap (₹ Cr) |
|---|---|---|---|---|---|---|
| Embassy Office Parks | Embassy Group & Blackstone | Office | Apr 2019 | ~51 | ~92% | ~40,000 |
| Mindspace Business Parks | K Raheja Corp & Blackstone | Office | Aug 2020 | ~38 | ~91% | ~39,000 |
| Brookfield India Real Estate | Brookfield Asset Management | Office | Feb 2021 | ~28 | ~88% | ~27,000 |
| Nexus Select Trust | Blackstone | Retail (Malls) | May 2023 | ~10.6 | ~97% | ~22,000 |
| Knowledge Realty Trust | Blackstone & Sattva Group | Office | Aug 2025 | ~46.3 | ~91% | ~55,000 |
Source: NSE, company filings, Screener.in. Market cap figures are approximate as of early 2026
Notice the Blackstone pattern — they sponsor or co-sponsor four of five listed REITs. This isn't a coincidence. Blackstone is the world's largest commercial real estate owner, and they've systematically used the Indian REIT structure to monetise their office and retail portfolios while retaining operational control and ongoing management fees.
Listed InvITs
| InvIT | Sponsor | Asset Type | Listed | Approx. Market Cap (₹ Cr) |
|---|---|---|---|---|
| IRB InvIT Fund | IRB Infrastructure | Toll Roads | May 2017 | ~4,900 |
| IndiGrid Infrastructure Trust | KKR & Sterlite Power | Power Transmission | Jun 2017 | ~12,500 |
| PowerGrid InvIT | Power Grid Corp (Govt of India) | Power Transmission | May 2021 | ~15,000 |
| Indus Infra Trust | GR Group (AIPL) | Highways (HAM) | Mar 2024 | ~5,500 |
| Capital Infra Trust | Gawar Construction | Highways (HAM) | Jan 2025 | ~2,200 |
Source: NSE, company filings, Screener.in. Market cap figures are approximate as of early 2026
The InvIT landscape is more diverse by asset type and sponsor profile. You have government-backed transmission assets (PowerGrid InvIT), private toll roads (IRB), KKR-backed transmission (IndiGrid), and newer HAM-based highway trusts (Indus Infra, Capital Infra). Each carries a meaningfully different risk-return profile.
Part 4: Track Record — What Have They Actually Delivered?
Let's get to the numbers that matter. Below is a consolidated view of how listed REITs and InvITs have performed since their respective listings, encompassing both price appreciation and distributions.
REIT Performance Snapshot
| REIT | IPO Price (₹) | Approx. Current Price (₹) | Price CAGR (Since IPO) | Avg. Dividend Yield | Est. Total Return CAGR |
|---|---|---|---|---|---|
| Embassy Office Parks | 300 | ~430 | ~5.3% | ~5.5% | ~10–11% |
| Mindspace Business Parks | 275 | ~465 | ~10% | ~5.0% | ~14–15% |
| Brookfield India | 275 | ~310 | ~2.5% | ~5.0% | ~7–8% |
| Nexus Select Trust | 100 | ~155 | ~18% | ~4.5% | ~22–23% |
| Knowledge Realty Trust | 100 | ~115 | Too early | Yet to declare | Too early |
Source: NSE, Bloomberg, company filings. Prices and yields are indicative estimates as of early 2026. Actual returns depend on purchase date. Past performance is not indicative of future returns.
A few observations worth noting:
Embassy's modest price CAGR is misleading. It listed in April 2019 — months before COVID-19 devastated office leasing, followed by the sharpest global rate-hiking cycle in decades. Both headwinds have now reversed. Office leasing in India hit ~70 million sq ft in 2025, and RBI's 125 bps of cuts have meaningfully improved REIT economics. Embassy's total return (price + yield) of ~10–11% over nearly 7 years, through arguably the worst macroeconomic sequence for office REITs, is actually quite respectable.
Mindspace has been the best performer among office REITs, benefiting from heavy exposure to Hyderabad — arguably India's strongest office market over the past five years. The 5-year return exceeds 50%.
Nexus Select Trust's returns look exceptional, but context matters — it's a short track record (listed May 2023) during a period when retail consumption and mall footfalls surged post-COVID. The sustainability of 20%+ total returns over a longer period is uncertain for a retail REIT.
Cumulative distributions by listed REITs exceed ₹22,800 crore since their IPOs. That's real cash returned to unitholders from real rent collected from real tenants.
InvIT Performance Snapshot
| InvIT | IPO Price (₹) | Approx. Current Price (₹) | Current Dividend Yield | Key Observation |
|---|---|---|---|---|
| IRB InvIT Fund | 100* | ~62 | ~12% | Price erosion offset by high distributions. Total return still positive. Concession assets with finite life |
| IndiGrid | 100 | ~165 | ~9.5% | Strong performer. Transmission assets with 35-year concessions. KKR-backed quality |
| PowerGrid InvIT | 100 | ~95 | ~13% | Government-backed. Very high yield but limited price appreciation. Sovereign-grade counterparty |
| Indus Infra Trust | 100 | ~122 | ~8% | HAM-based highway portfolio. Annuity income reduces toll revenue risk. CRISIL AAA rated |
| Capital Infra Trust | 99 | ~100 | Early stage | Newest entrant. HAM highway portfolio across 7 states. Backed by Gawar Construction |
Source: NSE, Bloomberg, company filings. Prices and yields are indicative estimates as of early 2026. *IRB InvIT underwent multiple corporate actions; original issue price adjusted. Past performance is not indicative of future returns.
The InvIT story illustrates a crucial principle: high yield is not the same as high total return. IRB InvIT offers a ~12% yield, but the unit price has eroded from ₹100 to ₹62 — because toll road concessions have finite lives, and the market prices in that terminal value decline. In contrast, IndiGrid's transmission assets have 35-year concessions and regulated tariffs, producing both stable income and modest capital appreciation.
Nifty REITs & InvITs Index: The Composite View
The Nifty REITs & InvITs Index, launched in July 2023, tracks all 10 publicly listed trusts. For CY 2025, it delivered a total return of 25.48% versus Nifty 50's 11.88%. Since inception, the index has generated approximately 13% annualised returns with lower volatility than pure equities.
That's a data point worth pausing on. An asset class most Indian investors ignore has quietly outperformed the headline equity index while generating visible quarterly income.
Part 5: The Evaluation Framework — What to Look for Before Investing
Not all REITs and InvITs are created equal. Here's the framework we use to evaluate them:
For REITs (Office and Retail)
| Metric | What to Look For | Why It Matters |
|---|---|---|
| Occupancy Rate | >88% for office, >95% for retail | Direct driver of rental income. Below 85% signals structural issues |
| WALE (Weighted Avg Lease Expiry) | 6+ years for office REITs | Longer WALE = more predictable cash flows. Short WALE means re-leasing risk |
| Rental Escalation | Built-in 10–15% every 3 years | Your inflation hedge. Without escalation clauses, real returns erode over time |
| NAV Premium/Discount | Compare market price to Net Asset Value | Buying at a discount to NAV gives you a margin of safety. Premiums signal expensive entry |
| Tenant Quality & Concentration | Top 10 tenants < 50% of rent. Diversified across sectors | GCCs and Fortune 500 tenants have lower default risk. High concentration = single point of failure |
| Debt/Leverage | Debt-to-Asset Value < 35%. Interest coverage > 2.5x | REITs can lever up to 49%. Lower is safer. Watch the cost of debt — declining rates help immensely |
| Distribution Yield vs. Distribution Growth | Yield > 5%, growing annually | High yield with declining distributions is a trap. You want both income and income growth |
| Geographic Diversification | Assets across 3+ cities | Single-city exposure creates micro-market risk. Diversification smooths vacancy shocks |
For InvITs (Roads, Transmission, Pipelines)
| Metric | What to Look For | Why It Matters |
|---|---|---|
| Concession Type | BOT (Toll) vs HAM (Annuity) vs Availability-based | Toll = traffic volume risk. HAM = government annuity (more predictable). Availability = payment for maintaining asset readiness |
| Remaining Concession Life | Longer is better. Watch for assets nearing expiry | Unlike REITs (perpetual ownership), InvIT assets revert to the government after concession ends. Terminal value = zero for those assets |
| Traffic Growth / Revenue Visibility | For toll roads: consistent traffic growth > GDP growth | Toll revenue is directly linked to traffic volumes. HAM assets avoid this risk entirely |
| Counterparty Quality | NHAI, PGCIL, state utilities — sovereign/quasi-sovereign | Government-backed annuities have near-zero default risk. Private offtakers carry credit risk |
| Debt Structure | Fixed vs floating, refinancing schedule, credit rating | InvITs can lever up to 70%. Floating rate debt in a rising rate environment compresses distributions |
| Sponsor Track Record | Execution history, asset pipeline, conflict of interest policies | Sponsors control which assets enter the trust. Poor sponsors can dump underperforming assets into the InvIT |
The single most important distinction for InvITs: toll-based (BOT) assets carry traffic volume risk; annuity-based (HAM) assets do not. The newer highway InvITs (Indus Infra, Capital Infra) are predominantly HAM, which makes their cash flows significantly more predictable — almost bond-like — compared to older toll-road InvITs like IRB.
Part 6: Taxation — The Part Everyone Gets Wrong
REIT and InvIT distributions are not a single tax line item. Each quarterly distribution is a cocktail of three to four components, each taxed differently.
| Component | Tax Treatment (Resident) | TDS Rate |
|---|---|---|
| Interest income | Taxable at slab rates under "Income from Other Sources" | 10% |
| Dividend (SPV opts for S.115BAA) | Taxable at slab rates | 10% |
| Dividend (SPV does NOT opt for S.115BAA) | Exempt in investor's hands | Nil |
| Rental income (direct REIT ownership) | Taxable under "House Property" at slab rates (30% standard deduction available) | 10% |
| Return of capital / Debt repayment | Not immediately taxable. Reduces cost of acquisition. Excess over cost = taxable | Nil |
| STCG (holding ≤ 12 months) | 20% | — |
| LTCG (holding > 12 months) | 12.5% on gains exceeding ₹1.25 lakh (no indexation) | — |
Source: Income Tax Act, S.115UA, S.194LBA. Rates for FY 2025-26. Surcharge and cess additional. Tax treatment effective from Budget 2024 changes (STCG at 20%, LTCG at 12.5%).
The critical takeaway: if you're in the 30% tax bracket, the interest component of your distribution is taxed at 30%+ surcharge and cess, not at the 10% TDS rate. TDS is merely an advance payment. Most SPVs of the listed REITs and InvITs have opted for S.115BAA, which means dividends are also taxable at slab rates.
The "return of capital" component is the one that confuses investors most. It isn't income — it's the SPV repaying the trust's loan. You don't pay tax on it immediately, but your cost of acquisition gets reduced, which means your eventual capital gains tax will be higher when you sell. Think of it as deferred tax, not tax-free income.
Each trust issues Form 64B annually with the exact break-up of each distribution component. Use it.
Part 7: India vs. The World — How Do We Stack Up?
India's REIT/InvIT market is young. The first REIT listed in 2019 — about 60 years after the US pioneered the structure in 1960. But the trajectory is familiar.
| Country | REIT Legislation | Approx. Market Cap (USD Bn) | Number of Listed REITs/Trusts | Notable Sectors |
|---|---|---|---|---|
| United States | 1960 | ~1,400 | ~220 | Data centres, cell towers, healthcare, self-storage, industrial |
| Japan | 2001 | ~130 | ~60 | Office, residential, logistics, hotels |
| Singapore | 1999 | ~70 | ~40 | Retail, industrial, hospitality, data centres. Cross-border holdings |
| Australia | 1971 | ~100 | ~50 | Logistics, retail, diversified. Goodman Group is a global heavyweight |
| Hong Kong | 2003 | ~35 | ~11 | Retail, office. Link REIT is Asia's largest REIT by market cap |
| India | 2014 | ~22 | 10 (5 REITs + 5 InvITs) | Office, retail, toll roads, power transmission, highways |
Source: Nareit, FTSE EPRA, NSE, various industry reports. Market caps are approximate as of late 2025. Global REIT market cap exceeds $2 trillion across 40+ countries.
Three parallels worth drawing:
The US in the early 1970s is India in 2026. The US had fewer than 40 listed REITs in the 1970s with a combined market cap of ~$1.5 billion. Today it has 220+ REITs worth $1.4 trillion. What changed? Institutional adoption, index inclusion, sector diversification beyond just office and retail, and tax clarity. India is at the exact same inflection point — SEBI's reclassification of REITs as equity instruments mirrors the 2001 US decision to include REITs in the S&P 500, which triggered a massive wave of institutional buying.
Singapore's cross-border model is instructive. Most Singapore-listed REITs own assets outside Singapore — in China, India, Australia, Europe. India could eventually evolve towards this, with Indian-listed REITs owning assets abroad or international REITs listing in India's GIFT City framework.
Sector diversification is inevitable. India's listed universe is currently dominated by office (4 of 5 REITs). Globally, the most valuable REIT sectors are data centres (think Equinix, Digital Realty), cell towers (American Tower, Crown Castle), industrial/logistics (Prologis), and healthcare. India will see logistics REITs, data centre REITs, and potentially warehousing REITs within the next 3–5 years. The SM REIT framework, targeting ₹50–500 crore assets, will accelerate this diversification.
Part 8: The Portfolio Role — Where Do REITs and InvITs Fit?
The honest answer: REITs and InvITs are neither equity substitutes nor bond substitutes. They're a distinct asset class with distinct return drivers.
| Characteristic | Equities | Bonds / FDs | REITs | InvITs |
|---|---|---|---|---|
| Primary return driver | Earnings growth | Coupon | Rent + appreciation | Tariff/toll + appreciation |
| Income visibility | Low | High | Medium-High | High (esp. HAM/availability) |
| Inflation protection | Moderate | None | Good (lease escalations) | Moderate (tariff revisions) |
| Interest rate sensitivity | Low | High | High | High |
| Liquidity | High | Medium | Low-Medium | Low |
| Expected total return | 12–15% CAGR | 6–8% | 10–14% | 9–14% |
For a well-constructed portfolio, a 5–15% allocation to REITs and InvITs can serve three purposes simultaneously: generate visible quarterly income, provide partial inflation protection through rent escalations and tariff revisions, and improve diversification because these assets are driven by occupancy cycles and infrastructure utilisation rather than equity market sentiment alone.
The interest rate environment matters enormously. The RBI's 125 basis points of cumulative cuts in 2025 (repo rate from 6.50% to 5.25%) created a tailwind that boosted REIT/InvIT valuations and reduced their borrowing costs in one shot. In a rate-cutting cycle, REITs and InvITs tend to outperform. In a hiking cycle, they struggle. The 2022–23 period proved this painfully.
Part 9: Five Common Mistakes Investors Make
1. Treating distribution yield as "return." A 12% yield means nothing if the unit price drops 15%. Total return = yield + price change. Always look at both.
2. Ignoring the composition of distributions. The interest component is taxed at slab rates. The return of capital component reduces your cost basis. Not understanding this leads to both tax surprises and incorrect return calculations.
3. Comparing REIT yields to FD rates. An FD is a fixed-income instrument with zero price risk. A REIT is a real-asset instrument with both income and price volatility. They serve different portfolio functions and shouldn't be compared on yield alone.
4. Ignoring liquidity constraints. Average daily trading volumes for REITs are under ₹80 crore and for InvITs under ₹25 crore. If you need to liquidate a large position quickly, impact costs can be significant. This is improving but remains a real constraint for institutional-size allocations.
5. Not monitoring sponsor behaviour. Sponsors decide which assets enter the trust, at what valuation, and with what leverage. They also control management fees. Misaligned sponsor incentives — like using the InvIT to offload underperforming assets at inflated valuations — can destroy unitholder value. Watch related-party transaction disclosures carefully.
Part 10: What's Coming Next
The REIT/InvIT ecosystem in India is approaching an inflection point. Here's what we're watching:
New listings: Industry estimates suggest potential IPOs for large office REITs, a logistics REIT, and up to three power transmission InvITs over FY26–27, potentially adding ₹75,000–85,000 crore of new float to the market.
SM REITs: The Small and Medium REIT framework (assets sized ₹50–500 crore, minimum investment ₹10 lakh) will bring fractional ownership platforms under SEBI regulation. Platforms like PropShare and hBits are expected to launch SM REIT schemes in 2026, offering higher yields (8–12%) from warehouses, premium offices, and smaller commercial assets.
Passive products: The Nifty REITs & InvITs Index already underpins two passive funds. A dedicated REIT ETF of scale would be the next catalyst for retail adoption — making it possible to buy the entire listed REIT/InvIT universe in a single unit.
Asset Monetization Plan 2025–30: The government's plan to monetise existing public infrastructure (roads, railways, power, telecom) will generate a pipeline of assets ideally suited for the InvIT structure. Roads, which already represent the largest share of InvIT-held assets, will see continued growth.
Dedicated CPSE REITs: The Union Budget 2026–27 mentioned accelerating the recycling of Central Public Sector Enterprise real estate assets through dedicated REITs. This could meaningfully expand the listed REIT universe beyond private-sector office and retail assets.
The Bottom Line
REITs and InvITs won't make you rich quickly. They're not momentum plays. They don't have the narrative excitement of small-cap stocks or the perceived safety of fixed deposits.
What they offer is something more structural: a claim on real, income-generating assets — offices where people work, malls where people shop, roads people drive on, transmission lines that power cities — packaged in a liquid, regulated, transparent structure that mandates quarterly income distribution.
The Nifty REITs & InvITs Index returned 25.48% in 2025 while the Nifty 50 returned 11.88%. That's not a fluke year — it reflects the convergence of rate cuts, regulatory upgrades, and strong operating fundamentals in commercial real estate and infrastructure.
For investors willing to understand the structure, evaluate each trust on its own merits, and accept the liquidity trade-off, a thoughtful allocation to REITs and InvITs can add both income and diversification to a portfolio in ways that neither pure equities nor pure fixed income can replicate.
The smart money is already moving. Four RBI rate cuts in 2025. SEBI reclassification. Growing institutional flows. The question isn't whether Indian REITs and InvITs will mature into a serious asset class. It's whether you'll be positioned before or after the market prices it in.
Disclaimer: This article is for educational and informational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. REITs and InvITs carry market risk, interest rate risk, and liquidity risk. Past performance is not indicative of future returns. Investors should consult a SEBI-registered investment advisor before making investment decisions. Grey Sky Capital Private Limited (SEBI Registration: INP000009694) is a SEBI-registered Portfolio Management Service provider. The views expressed here are those of the author and do not constitute a solicitation to invest in any specific REIT, InvIT, or PMS strategy.
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