REITs and InvITs in India: Key differences and considerations

Learn the key differences between REITs and InvITs in India. Understand their underlying assets, risks, and which one aligns better with your investment goals

By Forbes India

Published: Aug 18, 2025 03:02:09 PM IST

Updated: Aug 18, 2025 03:07:54 PM IST

As more people look beyond traditional investment routes like fixed deposits, stocks, or gold, alternative options have caught attention, especially those that offer the potential for steady income without the usual day-to-day involvement.

If you’ve explored new avenues of passive income or portfolio diversification, you’ve likely come across the terms REITs and InvITs. Both these investment vehicles have been gaining ground in India over the past few years, particularly among those looking for medium- to long-term investment ideas that balance income and growth.

Although they may seem similar, there are important differences worth noting and understanding how REITs and InvITs work can help you determine where they might fit in your portfolio.

First of all, What are REITs?

Real Estate Investment Trusts (REITs) operate similarly to mutual funds, but instead of investing in stocks or bonds, they pool money to invest in income-generating real estate. These include office complexes, shopping malls, warehouses, and healthcare facilities. REITs in India are listed and traded on stock exchanges, making it easy for you to buy or sell units just like shares.

REITs follow a structured model involving a sponsor, a management company, and a trust. This clear separation of roles brings some transparency and accountability to the structure.

Earnings typically come from rental income and property sales. By regulation, REITs are required to distribute a large portion of their taxable income (around 90 percent) as dividends.

About InvITs

Infrastructure Investment Trusts (InvITs) provide retail investors with a way to participate in large-scale infrastructure projects, previously limited to big institutional players.

Like REITs, they pool funds from multiple investors, but instead of real estate, the money is used to manage large infrastructure projects like toll roads, bridges, power transmission networks, gas pipelines, airports, and telecom towers.

InvITs are usually set up by sponsors (private equity firms or infrastructure companies) who transfer ownership of operational projects to the trust. In return, the trust issues units to investors, allowing them to earn a share of the returns. Revenue comes from long-term contracts, toll collections, or user fees.

Together, both REITs and InvITs managed total assets worth over $80 billion, indicating a growing interest in these alternatives to traditional investment routes.

Key differences between REITs and InvITs

To understand REITs vs. InvITs, here’s a quick comparison:

Specifics	REITs	InvITs
Underlying asset of investment	Commercial real estate, like offices, malls, hotels, warehouses, etc., either completed or under construction	Infrastructure projects like seaports, bridges, power lines, cell towers, highways, and so on
Revenue generation and stability	Mostly through rent and occasional property sales. Income stability is moderate, depending on rental rates and occupancy	From toll collections, usage charges, or long-term contracts. Income stability is relatively stable due to fixed cash flows
Structure	3-tier structured model with a sponsor, a management company, and a trust	Similar 3-tiered structure with a sponsor, trustee, and investment managers
Liquidity	High liquidity due to smaller trading units	Lower liquidity than REITs due to long-term infrastructure projects
Risks	Market-driven, linked to property market cycles	Regulatory changes, political involvement, and project execution risks
Minimum capital	₹50,000	₹1 lakh

Benefits of REITs and InvITs

For anyone comparing REITs vs. InvITs, here are some advantages to know:

Liquidity: Since both REITs and InvITs are listed on stock exchanges, units can be traded with ease, offering flexibility and easier access to funds.
Transparency: Regular net asset value disclosures and portfolio updates make it simpler for you to track investments and their performance.
Regulated structure: REITs and InvITs are governed by the Securities Exchange Board of India (SEBI), which ensures that clear rules are followed regarding formation, management, and reporting.
Low entry barrier: You can start with relatively small amounts, unlike traditional real estate, which demands high capital.

Things to consider before investing

Before investing in REITs and InvITs, consider these few key factors:

Minimum investment: SEBI has set the entry point at ₹50,000 for REITs and ₹1 lakh for InvITs, based on the varying scale and structure of the assets involved.
Liquidity levels: REITs in India tend to be more liquid, partly due to lower unit prices and broader investor familiarity. InvITs, on the other hand, involve longer time horizons on infrastructure projects and larger initial investments than REITs, which can affect liquidity.
Government support: Tax incentives and policy backing can play a fundamental role in improving long-term returns. Keeping track of these announcements can help shape your investment strategy.
Growth outlook: REITs in India often grow through acquisitions or redevelopment. Whereas, InvITs focus more on bidding for new operational assets, which can shape returns over time.

If you’re weighing REITs vs. InvITs, the choice depends on your risk appetite, financial goals, and comfort with the investment vehicles; there’s no one-size-fits-all approach.