REITs, InvITs beat equities and debt in a six-year span

Synopsis

Alternative assets like REITs and InvITs have surpassed traditional investments. These instruments offer attractive returns and tax efficiency. Investors are increasingly drawn to these assets for predictable cash flows. The market cap of these listed entities provides ample diversification opportunities. Investors can anticipate strong internal rates of return over a four-year holding period.

Mumbai: Alternative assets such as real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) have outpaced traditional avenues, including shares and fixed-income, in the past six years as comatose equities and better tax efficiency boosted investor appetite for these instruments.

According to data compiled by Alt Capital, the Nifty REIT-InvIT index has outperformed both equities and fixed income over the long term. Between July 1, 2019 and March 2026, the index delivered an annualised return of 12%, compared with 11.1% for the Nifty 50, 7.5% for debt funds, and 6.5% from fixed deposits.

"Range-bound equity markets in the last 18 months have drawn investors to alternate assets," said Vivek Rajaraman, managing director, Listed Investments, Waterfield Advisors. "These instruments have low correlation to other asset classes like equity and fixed income." REITs and InvITs are listed vehicles owning income-generating assets-offices, malls, roads and power networks-and distribute most cash flows as payouts. They can be bought and sold directly on exchanges like shares. Regulations require these vehicles to distribute at least 90% of their taxable income, offering investors predictable cash flows, typically on a quarterly or half-yearly basis.

Agencies

With 12% annualised Return on Index...

In India, REITs and InvITs own and manage $27 billion and $85 billion of assets, respectively, while the total market cap of these listed entities is $24 billion, which provides enough opportunities for investors to build a diversified portfolio, said Kunal Moktan, CEO and co-founder, Alt Capital. The investor base in both these instruments expanded to nearly 8 lakh in 2026 from about 19,000 in 2019.

Embassy Office Parks REIT, Brookfield India Real Estate Trust, Nexus Select Trust, IndiGrid Infrastructure Trust and Knowledge Realty Trust are among the popular ones. Under the revised tax framework, capital gains on REIT and InvIT units are treated on a par with equity investments. "As per new tax rules, capital gains on these units are taxed like equities at 12.5% if held for more than a year and 20% if held for less than a year, making them tax efficient," said Nikhil Gupta, founder, Sage Capital.

"While evaluating these instruments, investors should also look for arrangements with parent or third parties for acquisition of additional assets, team track record of acquiring assets from third parties, acquisition pipeline and development or expansion opportunities," said Abhishek Goel, MD and head, Infrastructure and Real Assets, Neo Alternative Asset Managers. Mokan said investors could expect an internal rate of return (IRR) of 12-15% over a four-year hold period through distributions and capital growth.