The listed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have raised Rs 18,658 crore during the first six months of the current financial year (H1 FY24), according to the data revealed by the Securities and Exchange Board of India (Sebi). This comprises Rs 12,753 crore through InvITs and the remaining Rs 5,905 crore via REITs. This fund mobilisation can be attributed to a strong demand for infrastructure investment, attractive returns and favourable government policies.
This came following a fund collection of Rs 2,596 crore through listed Infrastructure Investment Trusts (InvITs) in the entire FY23, although the amount mopped up through listed Real Estate Investment Trusts (REITs) was nil, as reported by Sebi. With the continued focus of the central and state governments on infrastructure development, the growth seen in REITs and InvITs is expected to stay strong in H2 FY24.
A Real Estate Investment Trust (REIT) is a company that owns and typically manages income-generating real estate and related assets. These assets can include office buildings, shopping malls, hotels, resorts, warehouses, apartments, self-storage facilities, loans or mortgages. Investing in REITs offers an excellent way to diversify your investment portfolio beyond traditional bonds and stocks.
On the other hand, Infrastructure Investment Trusts (InvITs) resemble mutual funds and allow individual or institutional investors to make small investments in infrastructure projects. In return, they receive a share of the income generated by these investments. InvITs have garnered significant attention for their capacity to invest in a broader spectrum of assets, encompassing bridges, roads, railways, renewable energy projects, power transmission lines and gas pipelines. Their tax-exempt status and the anticipated substantial growth in India’s infrastructure sector enhance their appeal.
Although these investment options are relatively new to Indian investors, their popularity is steadily increasing. These investment instruments are favoured by investors due to their diversification benefits, regular income distribution and liquidity, as they are all traded on stock exchanges. The funds raised through these instruments play a crucial role in enabling infrastructure developers to monetise their assets and allocate resources to future projects, ultimately contributing to the country’s development.
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