Economic Growth will Pick Up Pace Due to Capital investment in REITs and InvITs

Investments in the Real Estate Investment Trusts (REITS) and Infrastructure Investment Trusts (InvITs) are likely to fuel economic growth. Recent reports suggest that REITS and InvITs can be used to attract private investments for the real estate and the infrastructure sector. This will help to alleviate problems like funding requirements, corporate governance issues, and limited exit options. So far, InvITs and REITS have raised capital worth more than USD 9.7 billion in India. Similar to the trends in other developing economies around the world, these fundraising paths have been growing.

Those who invest in these bodies enjoy various advantages, such as a stable yield and regular distribution of cash. Moreover, they get to expand their asset base. The long-term investment outlook and favourable policies by the government are playing an important role in attracting investment from various marquee investors.

InvITs are likely to help monetize certain existing projects. These include roads, highways, conventional power and renewable energy, railways, etc. So far, the REITS and InvITs in India have been performing quite well. The three listed REITS in India have a combined market cap of USD 7 billion, while the listed InvITs have a market cap of USD 10 billion.

While the COVID-19 pandemic posed a challenging situation for REITs, the long-term prospects look good so far. The demand for real estate properties is likely to stay. InvITs and REITS would help the government by funding its infrastructure plans and monetization plans. They are mostly governed by the SEBI Real Estate Investment Trusts Regulations, 2014 and SEBI Infrastructure Investment Trusts Regulations. It seems that REITS and InvITs are going to play a major role in pushing the growth of the country’s infrastructure and economy.