Apr-Sep: REITs and InvITs get Rs 18,658 cr due to strong infra demand and excellent yields

 Apr-Sep: REITs and InvITs get Rs 18,658 cr due to strong infra demand and excellent yields

Data from SEBI indicates that during the April–September 2023–2024 period, these new investment vehicles brought in Rs 18,658 crore. This is made up of Rs 5,905 crore via REITs and Rs 12,753 crore through InvITs.

Data from SEBI indicates that during the April–September 2023–2024 period, these new investment vehicles brought in Rs 18,658 crore. This is made up of Rs 5,905 crore via REITs and Rs 12,753 crore through InvITs.

A combination of favorable government policies, high demand for infrastructure investment, and appealing returns have driven capital mobilization via listed REITs and InvITs to a total of Rs 18,658 crore during the current fiscal year, which ended in September.

This followed a median 2022–2023 fund collection of Rs 2,596 crore via listed Infrastructure Investment Trusts (InvITs); however, statistics with the Securities and Exchange Board of India (SEBI) indicated that no money was collected through listed Real Estate Investment Trusts (REITs).

Experts predict that the patterns seen in REITs and InvITs will hold true during the second half of the year.

"The fresh savings are going to continue similarly as what occurred in the last six months, as well as the investments will keep doing to be towards InvITs as both the national government and the state governments will keep concentrating more on infrastructure advancement" Himanshu Kohli, co-founder of Client Associates, stated. "Hence, the trends you have all witnessed in REITs and InvITs are going to continue in the second half of the year," he said.

Data from SEBI indicates that during the April–September 2023–2024 period, these new investment vehicles brought in Rs 18,658 crore. This is made up of Rs 5,905 crore via REITs and Rs 12,753 crore through InvITs.

The significant increase in fundraising through the route was ascribed by Karan Shetty, Co-Founder of Claravest, a platform for fractional ownership real estate investment, to a number of factors, including favorable government policies, the enormous demand for real estate investment, and the government's emphasis on urbanization and infrastructure development.

"Additionally, additional explanations for the surge in fund collection could be consistent earnings provided by REITs and InvITs as those trusts are required to distribute 90 percent of the revenue they generate to investors regularly, give portfolio diversification benefits, provide liquidity gets value as the units trade on stock exchanges as well as increased awareness and investor interest regarding these instruments," Feroze Azeez, Deputy CEO of Anand Rathi

Furthermore, the capital markets regulator Sebi and the government of India have actively contributed to the promotion and popularization of REITs and InvITs.

12,753 crore of the Rs 18,658 crore investment came via InvITs, while the remaining 5,905 crore came through REITs. Because they may invest in a larger variety of assets than REITs, such as roads, highways, bridges, trains, electricity transmission lines, renewable energy projects, and gas pipelines, InvITs have become more popular than REITs in terms of financing.

"Besides, InvITs are spared from paying income tax at the trust level, thereby making them more attractive to investors," Azeez said. "In addition, it is anticipated that the Indian infrastructure sector will experience substantial growth in the upcoming years, potentially propelling the expansion of InvITs," he said.

Although REITs and InvITs are relatively new investment products in the Indian context, their attractive yields and capital appreciation have made them quite popular in worldwide markets among passive income investors.

InvITs are made up of a portfolio of infrastructure assets, such as electricity transmission and roads, while REITs are made up of a portfolio of commercial real estate, much of which is already leased out. Infrastructure developers are assisted by InvITs and REITs in monetizing their assets and repurchasing funds for future projects.

As of August 8, 2023, Sebi statistics indicated that there were just four registered REITs and 22 registered InvITs, making these securities relatively new to Indian investors. As of September 30, 2023, the value of mutual fund interaction with InvITs and REITs was Rs 8,416 crore.