Real Estate Boom: Why REITs and InvITs Are set to Surge with Up to ₹11.6 Lakh Crore Flows By 2030

Real Estate Boom: Why REITs and InvITs Are set to Surge with Up to ₹11.6 Lakh Crore Flows By 2030​

Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are witnessing a pivotal growth phase in India's financial landscape. These segments, currently at a nascent stage, are projected by Avendus Capital to attract significant capital inflows of up to ₹11.6 lakh crore by the year 2030. This massive influx is anticipated as large domestic institutional investors increasingly ramp up their exposure to these yield-oriented assets.

The rapid expansion is fueled by improving liquidity and a supportive regulatory framework in India. As investor familiarity with REITs and InvITs increases, the sector is poised for accelerated growth, attracting capital from mutual funds, insurance players, and pension trusts alike.

Mutual Funds Poised to Lead Demand Surge​

Mutual funds are expected to be the primary driver of investment into the real estate and infrastructure trust sector by 2030. The segment's current exposure from mutual funds stands at around ₹30,000 crore, which could dramatically surge to ₹4.5 lakh crore over the next five years.

Experts forecast that the total assets under management for the industry will double in size, growing from the current ₹73.7 lakh crore to ₹155 lakh crore. Specifically, equity and hybrid funds are expected to increase their allocation from ₹21.8 lakh crore to ₹66.8 lakh crore during this period.

Insurers and Pension Funds Identified as Key Anchors​

Among the various pools of capital, insurance companies are highlighted by Avendus as being among the most suitable investors for REITs and InvITs. These companies are projected to contribute another ₹3.2 lakh crore in investments. This is based on the alignment between insurers' long-term liabilities and the predictable cash flows generated by these trusts.

Pension funds, recognized as a "natural long-duration investor base," are expected to add approximately ₹2.2 lakh crore of additional demand by 2030. REITs and InvITs are particularly well-suited for such investments due to their low volatility and annuity-like cash flow profile.

Institutional Participation: EPFO, NPS and Retail Investors​

The Employees' Provident Fund Organisation (EPFO), which manages assets totaling ₹28.3 lakh crore, has limited allocation capacity despite permits. While the investment bucket is up to 5%, Avendus projects that constraints will restrict EPFO allocations to around 3% of its projected FY30 assets.

Conversely, the National Pension System (NPS), managing ₹14.5 lakh crore, appears better positioned for growth. NPS regulations allow investments in REITs and InvITs up to a cap of 3% of fund assets and 5% of units from any single trust. Exempted pension trusts, collectively managing ₹4.9 lakh crore, also represent a potential source of capital.

Corporate Treasuries and Retail Demand Outlook​

Corporate treasuries are expected to contribute between ₹16,000 crore and ₹23,900 crore by 2030. Indian corporations currently manage large surplus balances in fixed deposits and debt mutual funds. REITs and InvITs possess the potential to capture a portion of this capital pool, especially from longer-duration surplus funds.

Retail investors, Ultra-High-Net-Worth Individuals (UHNIs), and family offices are expected to add ₹1.5 lakh crore in additional demand by 2030. For these individual investors, REITs and InvITs offer a strong alternative to long-term bank deposits and dividend stocks, promising yield-led returns potentially in the 10 to 15% range.

The Catalyst: Liquidity and Asset Monetization​

A crucial catalyst underpinning these projected flows is the expected increase in free float and market liquidity within the sector. As REIT and InvIT sponsors begin monetizing their mature assets, they will recycle capital into new projects. This process is likely to cause sponsor ownership in listed trusts to decline significantly.

Avendus suggests that this move toward greater liquidity will make REITs and InvITs more attractive for large institutional investors. The resulting virtuous cycle of deepens the market, attracts larger investors, and supports new issuances across both trust types.