New Delhi | NSE Indices Ltd, an arm of the National Stock Exchange (NSE), on Tuesday launched the country's first-ever Real Estate Investment Trusts and Infrastructure Investment Trusts index -- Nifty REITs and InvITs Index.
The index aims to track the performance of REITs and InvITs that are publicly listed and traded on the NSE, the exchange said in a statement.
A real estate investment trust (REIT) or an infrastructure investment trust (InvIT) is an investment vehicle that owns revenue-generating real estate or infrastructure assets.
REITs invest in real estate projects, whereas InvITs invest in infrastructure projects with a long gestation period. Through these trusts, investors get exposure to diversified regular income-generating real estate and infrastructure assets.
"REITs and InvITs are recognised as strong alternative financial instruments to raise funds against the cash generating infrastructure and real estate projects. For investors, these instruments provide exposure to real estate or infrastructure assets and offer diversification of risk from regular asset classes like equity, debt and gold and generate regular income," NSE Indices CEO Mukesh Agarwal said.
Welcoming the launch, Harsh Shah, CEO, IndiGrid, said he expects this index to act as a catalyst for Index Funds and ETFs (exchange-traded funds) participation in the space and increase fund flows. This is likely to also encourage passive investors, who typically choose index funds to invest in an infrastructure-linked stable yield platform.
Vivek Rathi, Director- Research, Knight Frank India said that the launch of Index products in the REIT investment space is a signal of a maturing Indian commercial real estate market, which offers value to not just global CRE occupiers but investors as well. "With the rising trend of passive and direct investing in an emerging market like India, retail and institutional investors will find value in these Index products thereby enabling greater investment participation in the Indian real estate market," he said.
Currently, although the country offers just three REITs focused on the commercial office segment, the next few years will see additions in the retail, warehousing and other emerging real estate segments, he added.
The weights of securities within the index will be based on their free-float market capitalisation, subject to a security cap of 33 per cent each, and the aggregate weight of the top three securities is capped at 72 per cent.
The Nifty REITs and InvITs index has a base value of 1,000 and the index will be reviewed and rebalanced on a quarterly basis.
