Robust Fund Collection by REITs and InvITs Reflects Strong Infrastructure Demand

The period from April to September in the current fiscal witnessed substantial fund mobilization of Rs 18,658 crore through listed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), driven by robust infrastructure demand and attractive returns. Let’s delve into the factors contributing to this significant fund collection and the outlook for REITs and InvITs.

Strong Demand and Favorable Policies

The surge in fund mobilization can be attributed to the strong demand for infrastructure investments, propelled by favorable government policies and initiatives. The focus on infrastructure development by both central and state governments has created a conducive environment for investments in REITs and InvITs.

Continuation of Positive Trends

Industry experts anticipate that the positive trends observed in REITs and InvITs during the first half of the fiscal year will persist in the second half as well. The ongoing momentum in fresh savings and investments, particularly towards InvITs, is expected to continue due to the continued emphasis on infrastructure development.

Fundraising Breakdown

Data from the Securities and Exchange Board of India (Sebi) reveals that Rs 18,658 crore was raised through REITs and InvITs from April to September 2023. Of this amount, Rs 12,753 crore was raised through InvITs, showcasing their popularity in fundraising compared to REITs, which raised Rs 5,905 crore during the same period.

Factors Driving Fundraising Surge

Several factors have contributed to the substantial jump in fundraising through REITs and InvITs. These include favorable government policies, significant demand for real estate investments, the government’s focus on urbanization and infrastructure, and regulatory frameworks that promote these investment avenues.

Benefits and Investor Interest

Investors are drawn to REITs and InvITs due to various benefits they offer. These include regular income distribution, diversification benefits, liquidity through stock exchange trading, and increased awareness among investors about these instruments. The income tax exemption at the trust level for InvITs adds to their attractiveness.

Future Growth Prospects

The infrastructure sector in India is poised for significant growth in the coming years, driving the potential expansion of InvITs. The unique ability of InvITs to invest in a wide range of infrastructure assets and their tax advantages positions them as promising investment vehicles for the future.

Global Popularity and Indian Market

While REITs and InvITs are relatively new in the Indian market, they are well-established and popular investment instruments globally, particularly among passive income investors. These instruments enable infrastructure developers to monetize assets efficiently and channel capital into upcoming projects.

Conclusion

The robust fund collection by REITs and InvITs underscores investor confidence in these investment avenues and the promising growth prospects in India’s infrastructure sector. With ongoing policy support, favorable market conditions, and increasing investor awareness, REITs and InvITs are expected to play a pivotal role in driving infrastructure development and investor wealth creation in the country.