India’s REIT and InvIT Market to Hit ₹20 Trillion AUM by 2030

India’s real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) are poised for an unprecedented growth surge, with total assets under management (AUM) expected to double to ₹20 trillion by 2030. A recent report by Avendus Capital suggests that the sector could unlock an additional ₹11.6 trillion in new investments over the next five years, driven by structural shifts in the Indian economy.

Massive Capital Inflows from Domestic Institutions

The report identifies a significant liquidity wave coming from domestic institutional investors. Currently, these institutions have utilized only 7.5% of their existing regulatory limits for investing in REITs and InvITs, leaving a massive ₹7 trillion opportunity for incremental capital deployment.

The breakdown of projected investments by 2030 highlights the dominance of domestic players:

Furthermore, non-institutional players, including Foreign Institutional Investors (FIIs), retail investors, High Net-worth Individuals (HNIs), and Family Offices, are expected to pump in an additional ₹1.5 trillion into the market by the end of the decade.

Untapped Potential and Sectoral Expansion

At just 1.5% of India's GDP, the REIT and InvIT market remains significantly underpenetrated when compared to mature global markets like the United States, Australia, Singapore, and Japan, where business trusts account for 5% to 12% of GDP.

This gap provides a massive runway for growth. The Total Addressable Market (TAM) for key sectors—including roads, office spaces, retail, transmission, renewables, telecom, and logistics infrastructure—is expected to double from ₹10 trillion in 2026 to much higher levels by 2030. This expansion is fueled by the need to financialize cash-generating core assets, allowing developers to recycle capital into new, large-scale infrastructure projects.

New Drivers: Passive ETFs and Global Index Inclusion

Beyond traditional institutional investing, new financial products are set to democratize access to these asset classes. The report suggests that Passive ETF products could bring in over ₹240 billion with even a modest 2% incremental allocation to the asset class.

Perhaps most significantly, the potential inclusion of Indian REITs and InvITs in global indices could unlock more than ₹1 trillion in fresh capital over the next five years, providing much-needed international liquidity to the Indian market.

A Shift in Investor Evaluation Frameworks

As the asset class matures, Avendus Capital advises investors to move beyond looking solely at distribution yields. Instead, a more holistic metric—Equity Internal Rate of Return (IRR)—should be the primary benchmark. Historically, these assets have offered an equity IRR that trends at a 200–700 basis point premium over the 10-year Government Securities (G-Sec) rate. Long-term returns will increasingly depend on factors like entry valuation, distribution growth, Net Asset Value (NAV) evolution, and terminal value.

Key Takeaways