InvIT vs REIT: Key Differences Explained 

Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have been around in India since 2014, providing investors a means to invest in real estate and infrastructure projects without owning them directly. In FY25, these instruments together raised ₹31,442 crore. 

While both are regulated by the Securities and Exchange Board of India (SEBI) and provide potential for regular income, they differ in structure, asset focus, and risk profile.

Let us understand the difference between REIT and InvIT to help you understand how each works and which one might better suit your financial goals.

What are REITs?

A Real Estate Investment Trust (REIT) is a type of financial vehicle that owns and manages properties that generate regular income. They are similar to mutual funds, but instead of stocks or bonds, they invest in real estate facilities such as industrial parks, offices, warehouses, hospitality centres, malls, healthcare centres, etc. 

REITs pool money from investors by providing them with an easy entry point into the real estate market. The main objective of REITs is to create regular income and capital appreciation. By regulation, REITs are required to distribute at least 90% of their income as dividends. The minimum investment amount ranges between ₹10,000 to ₹15,000. 

What are InvITs?

Infrastructure Investment Trust (InvITs) is a trust that pools money from investors to invest in income-generating assets. They are similar to REITs, except that they invest in infrastructure projects such as roadways, transmission lines, power plants, and other development projects that require time to generate consistent cash flow. 

Furthermore, they aim to provide a regular stream of income (through dividends) as well as long-term capital appreciation. Like REITs, InvITs are SEBI-regulated and are required to distribute at least 90% of their net distributable income to investors. The minimum subscription is also between ₹10,000 to ₹15,000.

Difference Between REIT and InVIT

The following table summarises the difference between InVIT vs REIT:

Basis of Difference	REITs	InVITs
Investment Objective	REITs focus on making real estate assets more accessible to individual investors and increasing retail participation.	InvITs focus on making infrastructure investments more accessible to private investors and expanding retail participation in the sector.
Investment Avenue	REITs invest in properties like warehouses, apartments, corporate offices, data centres, shopping malls, etc.	InvITs invest across infrastructure projects like transmission, roadways, environmental and renewable projects, etc.
Income	REITs offer highly stable income. Since they invest in commercial real estate with long-term leases, 80% of REIT assets are invested in income-generating (rental) properties.	InvITs also offer stable income. They invest more than 80% of their assets in operational and revenue-generating infrastructure, which has long-term contracts.
Risks	Since REITs own their real estate through long-term leases or freehold ownership, they are safe from political and regulatory threats. Furthermore, as REITs serve corporate clients, they face less political and regulatory risk.	Numerous InvITs invest in sectors associated with public welfare (highways and utilities), and any delay in regulatory approvals or regulatory changes could risk the infrastructure project. Additionally, any protests by environmentalists against road building or other such issues could risk the revenue generated by the infrastructure project in which InvIT has invested.
Liquidity	Lower unit pricing and smaller minimum trading quantities make REITs more liquid.	Large trading lot sizes and higher unit prices of InvITs make them less liquid.
Ownership	REITs either own the property or lease it on a long-term basis.	InvITs invest in infrastructure projects that are given back to the authority on completion or rebid once the contract period has expired.
Growth Prospects	REITs have a greater potential for growth due to their ability to remodel current properties, build new ones, and acquire completed/leased assets. REITs can also periodically adjust rents to keep pace with rising market expenses, allowing them to receive a bigger percentage of rental revenue.	InvIT can only grow if it can acquire projects at lower bids. Additionally, revenue increases when the infrastructure asset generates more money than anticipated. This could result in a significant monetary gain for InvIT in the stock market. For instance, a highway project may generate high toll revenue because the traffic is more than anticipated.
Regulations	REITs must follow the SEBI Real Estate Investment Trust Regulations, 2014.	InvITs must follow the SEBI Infrastructure Investment Trust Regulations, 2014.

InvIT vs REIT – Which is Better?

REITs and InvITs provide a straightforward way to invest in real estate and infrastructure projects. They let you benefit from the performance of real estate or infrastructure assets right through your demat account without incurring the high costs of acquiring them. 

REIT and InvIT investments are attractive to retail investors, high-net-worth individuals (HNIs), and retired individuals seeking a regular source of income, as these instruments are required to distribute the majority of their revenues to investors.

Choosing between REIT and InvIT investments largely depends on your investment objective and risk tolerance levels. To elaborate, REITs are more liquid due to their lower unit prices and smaller trading quantities, while InvITs are slightly less liquid than REITs. Furthermore, InvITs are more prone to political and regulatory risks than REITs. Ultimately, the choice depends on your risk appetite and investment horizon.

Conclusion

Whether it’s a REIT or an InvIT, it is essential to understand the structure, risks, and returns before investing. These instruments offer a great way to diversify your portfolio with exposure to real estate or infrastructure, without the burden of direct ownership.

But remember to analyse them using ratings from independent agencies that score these trusts based on the quality of their assets, cash flows, and other aspects. Additionally, because these investment vehicles are more complex to understand than typical mutual funds, it is better to seek expert advice before making an investment decision.

FAQs