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Demystifying REITs and InvITs: Investing in Infrastructure and Real Estate

experts reading construction plans with under construction building in the background – image explains reits and invits

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Unlock the potential of REITs and InvITs! Explore the world of infrastructure and real estate investments. Gain insights, make informed choices, and navigate these lucrative avenues. Dive in now!

Ever heard of investment options that offer attractive returns, regular income, and a chance to contribute to exciting growth sectors like infrastructure and real estate? If not, then let's get you familiarized with two rising stars in the investment worldREITs and InvITs!

What exactly are these mysterious acronyms?

REITs stand for Real Estate Investment Trusts, while InvITs are Infrastructure Investment Trusts. In simple terms, they are like mutual funds, but they pool money from investors to buy and manage specific assets – real estate like office buildings or shopping malls in the case of REITs, and infrastructure projects like roads, power grids, or renewable energy plants in the case of InvITs.

Why are they suddenly making headlines?

Because these investment options are on fire! Recent data reveals a whopping ₹18,658 crore pumped into REITs and InvITs just in the first half of 2023-24. This boom is attributed to various factors:

Government supportThe government's push for infrastructure development and urbanization is creating a perfect environment for these investments.
Attractive returnsWith regular income (90% of their income must be distributed to investors) and potential capital appreciation, these instruments offer a tempting proposition.
Diversification benefitUnlike investing in a single project, you spread your risk across a diversified portfolio of assets.
LiquidityUnits of these trusts trade on stock exchanges, making them easy to buy and sell.

But aren't they new and risky?

While relatively new in India, REITs and InvITs are well-established globally. In India, there are currently only four registered REITs and 22 registered InvITs, but experts believe this number will grow rapidly. While some risk is inherent in any investment, the government and regulatory bodies are actively promoting these instruments to ensure investor protection.

So, should you consider investing in REITs or InvITs?

Before jumping in, it's important to understand your financial goals and risk tolerance. These instruments are ideal for long-term investors seeking stable income and exposure to growth sectors. Consulting with a financial advisor can help you determine if REITs or InvITs are a good fit for your portfolio.

Here's a quick comparison to help you decide:

Feature  REITs    InvITs    
Assets:Real Estate (commercial)Infrastructure projects
Current popularity:LowerHigher
Tax benefits:LowerExempt from income tax at the trust level
Investment range:Wider variety of assetsMore limited options


Remember, diversification is key to a successful investment strategy. Whether you choose REITs or InvITs, or both, these innovative options offer an exciting avenue to participate in India's booming infrastructure and real estate sectors. But always do a thorough research before investing.