The combined assets under management (AUM) of infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) is expected to double to around ₹20 trillion by FY31 from approximately ₹10 trillion in FY26, reflecting a robust compound annual growth rate (CAGR) of around 15%, according to ICRA. This projection builds on the segment's strong historical performance, with combined AUM increasing to around ₹10 trillion in FY26 from around ₹4 trillion in FY21. The growth is expected to be driven by infrastructure monetisation, renewable energy and fibre platforms, commercial real estate, warehousing and data centres. The industry comprised 25 InvITs and six publicly listed REITs as of FY26, with roads emerging as the fastest-growing segment within InvITs, whose share in AUM rose to 43% in March 2026 from 16% in March 2021, while telecom remained marginally ahead at 44%. ICRA expects InvITs' AUM to increase to around ₹13.5 trillion by FY31 from ₹7 trillion as of FY26 and REITs' AUM to around ₹6.5 trillion from ₹3.1 trillion, as reported by Business Standard.
India has overtaken Hong Kong to become Asia's fourth-largest REIT market by market value, as of March 2026, with the country's REIT market expanding sharply over the past year. As of March 31, 2026, seven active REITs collectively held a market value of $17.7 billion, accounting for 6% of the regional market value. Despite India's rapid expansion, Japan remains Asia's largest REIT market by value, with 58 REITs worth $101.4 billion as of March 31, 2026, accounting for 36% of Asia's total REIT market value. Singapore followed with 39 REITs valued at $76.7 billion, while the Chinese mainland had 79 REITs worth $32.1 billion. India ranked fourth with seven REIT products and a market value of $17.7 billion, accounting for 6% of the regional market. Hong Kong, despite being overtaken by India, maintained 11 REITs with a combined market value of $17.4 billion, placing it fifth in the regional ranking.
The projected expansion is underpinned by the rapid growth and increasing market acceptance achieved over the past five years. InvIT AUM rose to around ₹7.0 trillion in March 2026 from around ₹3.2 trillion in March 2021, reflecting a CAGR of about 17%, while REIT AUM increased to around ₹3.1 trillion from approximately ₹0.7 trillion during the same period, reflecting a CAGR of about 33%. Office assets continue to anchor REIT portfolios, alongside gradual diversification into retail and warehousing. The ability of these vehicles to unlock capital from operational assets and redeploy it into new infrastructure and real estate development remains central to their long-term value proposition. Since FY20, InvITs and REITs have collectively mobilised around ₹20,000 crore through public issues, private placements, preferential allotments, institutional placements and rights issues, with InvITs accounting for nearly 80% of the amount raised, as reported by Business Standard.
A decade of regulatory reforms has strengthened the platform for future growth by improving investor access, funding flexibility and market depth. Recent measures include the reclassification of REITs as equity for mutual fund investment purposes in January 2026 and permission for banks to lend directly at the REIT level from October 1, 2026. The broadening of the definition of a strategic investor to include all qualified institutional buyers has further expanded the eligible pool of long-term domestic capital. Mutual funds' exposure to InvITs and REITs increased by 56% year-on-year to more than ₹310 billion as of June 2026, while participation from insurers, pension funds, sovereign funds and retail investors has also continued to deepen. Healthy risk-adjusted returns, with seasoned issuances recording a median extended internal rate of return (XIRR) of around 14%, and visible narrowing in borrowing spreads relative to G-Secs and AAA-rated corporate bonds have strengthened investor confidence in the asset class. ICRA notes that greater participation from domestic institutional investors and recent regulatory measures could improve funding flexibility for these assets.
The next phase of expansion is expected to be supported by continued monetisation of road and transmission assets, scaling up of renewable energy and fibre platforms, increasing penetration of REITs in commercial real estate and the emergence of warehousing and data centres as new growth avenues. Capital-raising activity has strengthened materially as the market has matured. Almost half of the cumulative capital mobilised since FY20 was raised during the last three years, highlighting stronger issuer activity and growing investor acceptance. The report expects data-centre and hospitality REITs to remain areas of activity, citing demand for digital infrastructure and tourism recovery, while acquisitions and mergers could remain active as REIT managers seek to expand portfolios and diversify assets. While the medium-to-long-term opportunity remains robust, the pace and quality of growth will depend on prudent debt structuring and disciplined asset acquisition. ICRA has identified key monitorables including refinancing risk, restrictive covenants at the underlying special purpose vehicles, valuation risk, bunching of cash flows, and changes in taxation.
