Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are innovative financial instruments that have emerged as pivotal investment avenues in India. As the country seeks to modernise its infrastructure and boost real estate development, these trusts provide a structured way for investors to gain exposure to these sectors. This article aims to explain the meaning and benefits of REITs and InvITs, highlighting their relevance in the Indian investment landscape.
REITs are companies that own, operate, or finance income-producing real estate across a range of property sectors. They allow individual investors to earn a share of the income generated through commercial real estate ownership without having to buy, manage, or finance any properties directly. In India, REITs were introduced in 2014, and since then, they have gained traction among investors seeking exposure to real estate.
InvITs on the other hand, are similar investment vehicles focused on infrastructure projects. They allow investors to invest in a diversified portfolio of infrastructure assets, such as toll roads, power plants, and pipelines. InvITs were introduced in India in 2016 to attract long-term capital for infrastructure development.
Although REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) share similarities as investment trusts, there are key distinctions that investors should consider:
REITs and InvITs represent a transformative approach to investing in real estate and infrastructure in India. They offer numerous benefits, including accessibility, liquidity, stable returns, and professional management, making them attractive options for both retail and institutional investors.
As India continues to grow and urbanise, these investment vehicles will play a crucial role in mobilising capital for essential sectors, ultimately contributing to the nation’s economic development. For investors looking to diversify their portfolios while supporting India's infrastructure and real estate sectors, REITs and InvITs present a promising opportunity.
Rohit Gyanchandani is Managing Director at Nandi Nivesh Private Limited
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