India's REIT and InvIT Market to Hit Rs 20 Trillion AUM by 2030

India’s real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) are poised for a massive capital surge, with the market expected to attract Rs 11.6 trillion in new investments over the next five years. According to a recent report by Avendus Capital, the total Assets Under Management (AUM) for this asset class could double to reach Rs 20 trillion by 2030.

Massive Institutional Inflows Expected

The growth trajectory of REITs and InvITs is being driven by a significant untapped potential among domestic institutional investors. Currently, these institutions have utilized only 7.5% of their existing regulatory limits for these asset classes, leaving an incremental investment opportunity worth approximately Rs 7 trillion.

Avendus Capital identifies domestic mutual funds and insurance companies as the primary engines of this growth. By 2030, mutual funds are projected to deploy Rs 4.6 trillion, while insurance firms are expected to contribute Rs 3.2 trillion. Additionally, domestic pension funds are anticipated to inject an incremental Rs 2.2 trillion into the market.

Structural Drivers and Sectoral Expansion

As India enters the ninth year of this multi-decadal growth journey, the market is evolving from niche instruments to mainstream capital market pillars. Currently, 32 listed trusts represent an AUM of Rs 10 trillion and a combined market capitalization of Rs 5 trillion.

The report highlights that the Total Addressable Market (TAM) for key sectors—including roads, office spaces, retail, transmission, renewables, telecom, and logistics—is expected to double from Rs 10 trillion in 2026 to much higher levels by 2030. This expansion is critical because India's REIT and InvIT market currently stands at just 1.5% of GDP, significantly trailing mature markets like the US, Australia, Singapore, and Japan, where business trusts account for 5% to 12% of GDP.

New Avenues for Retail and Global Capital

Beyond institutional giants, new financial products and global integration will broaden the investor base. The report suggests that passive ETF products could bring in over Rs 240 billion with even a modest 2% incremental allocation to the asset class. Furthermore, the potential inclusion of Indian REITs and InvITs in global indices could unlock more than Rs 1 trillion in capital over the next five years.

Other significant contributors include Foreign Institutional Investors (FIIs), High Net-worth Individuals (HNIs), Family Offices, and retail investors, who are collectively expected to invest an additional Rs 1.5 trillion by 2030.

A Shift in Investor Evaluation

As the asset class matures, Avendus Capital advises investors to move beyond looking solely at distribution yields. Instead, a more comprehensive metric—Equity Internal Rate of Return (IRR)—should be used. Historically, this metric has trended at a 200–700 bps premium over the 10-year Government Securities (G-Sec) rate. Investors are encouraged to analyze long-term factors such as entry valuation, NAV evolution, and terminal value to optimize returns.

Key Takeaways