Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are like mutual funds but for physical assets. Instead of stocks or bonds, they pool money to own and manage large-scale real estate (offices, malls) or infrastructure (highways, power lines).
Here is a breakdown of how they work and a look at the current market landscape in India as of early 2026.
1. How They Work
Both vehicles are regulated by SEBI and follow a similar "Trust" structure:
The Mandate: They must invest at least 80% of their assets in completed, revenue-generating properties.
The Payout: By law, they must distribute at least 90% of their net distributable cash flow to unitholders as dividends or interest.
Income Source:
REITs: Primarily rental income from office parks and malls.
InvITs: Toll collection, power transmission charges, or usage fees.
Liquidity: You can buy and sell "units" on the NSE/BSE just like regular stocks through your demat account.
2. Listed REITs (Real Estate)
India currently has five major listed REITs. While they faced early volatility, they have become stable yield-generators.
| REIT Name | Focus Area | 1-Year Return (Approx.) | Dividend Yield (Est.) |
| Mindspace Business Parks | Office (Mumbai, Hyd, Pune) | ~28.40% | 5–7% |
| Nexus Select Trust | Retail (Malls) | ~19.12% | 6–8% |
| Embassy Office Parks | Office (Bangalore, Noida) | ~18.64% | 5–7% |
| Brookfield India REIT | Office (Pan-India) | ~19.93% | 6–8% |
| Knowledge Realty Trust | Office / Tech Parks | ~18.74% | New Listing |
Note: Nexus Select Trust is currently the only retail (mall) focused REIT in India, which contributed to its higher growth in 2025 due to strong post-pandemic consumer spending.
3. Major InvITs (Infrastructure)
InvITs generally offer slightly higher yields than REITs but can be more complex due to the nature of their assets (e.g., a highway's toll ends when the concession period expires).
| InvIT Name | Sector | Key Performance Highlight |
| IndiGrid (India Grid Trust) | Power Transmission | Largest power InvIT; consistent ~10-12% yield. |
| POWERGRID InvIT | Power Transmission | Backed by the Govt of India; very high stability. |
| IRB InvIT Fund | Road / Tolls | High performance in 2025 due to increased traffic. |
| Cube Highways Trust | Road / Highways | Manages a massive portfolio of NHAI road assets. |
| National Highways InvIT | Roads (NHAI) | Publicly listed; backed by sovereign infrastructure. |
4. Key Differences for Investors
| Feature | REITs | InvITs |
| Risk | Lower (Property value appreciation) | Moderate (Usage/Traffic volume risk) |
| Growth | Rent escalations + Property value | New project acquisitions |
| Typical Yield | 5% – 7% | 7% – 12% |
| Best For | Capital growth + Moderate income | High, steady cash distributions |
Critical Considerations for 2026
SM-REITs: SEBI recently introduced "Small and Medium REITs," which allow you to invest in smaller properties (asset size < ₹500 Cr), opening up more niche opportunities.
Taxation: Returns are often split into Dividend, Interest, and Repayment of Capital. The tax treatment depends on whether the trust has opted for a specific tax regime—always check the quarterly distribution statement.
Interest Rates: Since both borrow money to buy assets, high interest rates can slightly reduce their distributable income.
Would you like me to analyze a specific REIT's portfolio or explain the tax implications on their dividend payouts?
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