Investors in India are increasingly exploring ways to generate regular income similar to rent—without actually purchasing real estate. In a detailed discussion with Zee Business, experts Pankaj Mathpal, Managing Director, Optima Money and Pooja Bhinde, Certified Financial Planner, explained how Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are enabling exactly that.
What are REITs and InvITs?
According to Pankaj Mathpal, both REITs and InvITs are “pooled investment products,” similar in structure to mutual funds. They collect money from multiple investors and deploy it into income-generating assets.
REITs (Real Estate Investment Trusts) invest in commercial real estate such as office spaces, malls, hotels, hospitals, and warehouses. These properties are leased out, generating rental income.
InvITs (Infrastructure Investment Trusts) invest in infrastructure assets like highways, power transmission projects, and energy infrastructure, which generate stable cash flows over time.
The income earned from these assets is then distributed among investors.
How do investors earn income?
Pooja Bhinde explained that these instruments allow investors to receive “rental-like income” without directly owning property. The key mechanism is regular cash distribution.
A major feature highlighted by Mathpal is the regulatory requirement that around 90 per cent of the net distributable cash flow must be paid out to investors. This creates a steady dividend-like income stream, similar to rent in traditional real estate.
Why are REITs and InvITs gaining popularity?
Experts noted several reasons behind rising investor interest:
- Low entry barriers: Investors can join at a comparatively smaller scale than when purchasing properties directly.
- Liquidity: They trade on stock exchanges.
- Diversification: They provide investment opportunities in real estate and infrastructure without owning it directly.
- Professional management: It is handled by specialised institutions.
The discussion also focused on the fact that investors have become interested in their transparency and ease of access.
Returns and market performance
Experts highlighted the strong historical performance. Bhinde further stated that in recent years, REITs and InvITs have delivered competitive returns, in some periods even outperforming traditional equity indices such as the Nifty 50.
For instance, in 2025, return in REITs and InvITs was reported at approximately 25.8 per cent, while that of Nifty 50 stood at 11.88per cent, demonstrating high investor interest. Nonetheless, these data are historical and do not guarantee future returns.
However, experts warned against investing too much because the level of returns varies depending on the state of the market.
Risk, volatility, and structure
Mathpal explained that while these instruments provide stable cash flows, they are still market-traded securities. This means their prices can fluctuate due to demand and supply, sometimes trading at a premium or discount to the underlying asset value.
He also emphasised the hybrid nature of these instruments:
- They behave partly like equity (market-traded instruments)
- Partly like debt (regular cash flows)
- And are backed by real assets (real estate or infrastructure)
However, unlike equities where earnings depend on company performance, REITs and InvITs rely on long-term lease or project cash flows, which tend to be more stable.
SEBI classification and future outlook
The experts also discussed regulatory developments. Mathpal noted that SEBI has been moving toward classifying REITs more like equity instruments, which could increase their presence in mutual fund portfolios and improve investor access.
This reclassification is expected to broaden exposure and potentially integrate these instruments more deeply into equity allocation frameworks.
Should investors consider REITs and InvITs?
Bhinde suggested that while REITs and InvITs can be a useful part of a diversified portfolio, they should not replace equities. Instead, they can act as a stabilising component, helping balance volatility while generating consistent income.
Mathpal echoed this view, stating that investors should focus on proper allocation rather than chasing returns, as these instruments perform differently across market cycles.
Key takeaways for investors
REITs and InvITs offer investors a unique opportunity: earning rental-like income without owning physical property. By pooling capital into real estate and infrastructure assets, they provide a combination of steady cash flows, market liquidity, and diversification.
However, experts stress that they should be used as part of a balanced investment strategy—not as a standalone wealth-building tool.