Rich Indians want property income without buying more property. What are they choosing?

A commercial building meant rent. A plot meant potential appreciation. A house or other physical asset could be passed on to the next generation.

But as family wealth has grown and portfolios have become more sophisticated, the approach is changing.

The wealthy are not necessarily moving away from real estate. Instead, they are increasingly looking for ways to get exposure to income-generating real assets without putting every new rupee into another physical property.

That is bringing instruments such as Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), private credit, private equity and Alternative Investment Funds (AIFs) into the conversation.

The Indian family office playbook: Now, next and beyond, published by EY and Julius Baer, says traditional Indian HNI and family-office portfolios were historically anchored in equities, fixed deposits and physical assets such as real estate and gold. But sophisticated investors are now diversifying into real assets, commercial real estate, infrastructure and commodities, along with alternatives.

The change is also visible in the allocation numbers. The report says 40% to 45% of allocations in many family offices are now directed towards alternatives, including private equity, venture capital, private credit, AIFs, REITs and InvITs.

And that is where the real-estate story gets interesting.

They still want real estate — just not necessarily another building

“Real estate was one of the major portfolio contributors of family offices, with more than 30% of portfolio composition,” says Chirag Muni, Executive Director, Anand Rathi Wealth Limited.

But, he says, the trend is evolving from owning concentrated physical properties towards more diversified exposure to alternatives.

The reason is not difficult to understand. A physical property can tie up a large amount of capital in one location, one asset and, in the case of commercial property, potentially one tenant.

REITs offer a different route.

Instead of buying an office building, an investor can buy units of a REIT that owns or manages a portfolio of income-generating commercial properties. The investor gets exposure to the underlying real estate and its cash flows without having to personally buy, maintain or manage the property.

Muni says this allows investors to retain exposure to real estate and infrastructure “without making every investment dependent on a single property, location or tenant.”

That distinction is becoming increasingly important as family offices try to move away from concentrated portfolios.

The EY-Julius Baer report itself describes REITs as “income-generating” real-estate exposure, with moderate liquidity, while InvITs provide exposure to long-duration infrastructure assets and regulated cash flows.

The numbers show why REITs are getting attention

This is no longer a tiny corner of the investment market.

According to the report, India’s listed REITs and InvITs together manage more than ₹9.8 lakh crore of assets as of March 2026.

The report says these vehicles typically provide regular income distributions of around 6%–9%, along with inflation-linked revenue escalations and the potential for capital appreciation linked to the underlying real assets.

The important word here is distribution, not guaranteed return.

REIT and InvIT distributions can change, while the market price of their units can also rise or fall.

That distinction matters for investors who may otherwise look at a 6%–9% distribution yield and assume it is equivalent to a fixed rental cheque.

Muni makes a similar point.

“REITs and InvITs can provide distribution yields of around 6% to 9%, but both are market-linked investments,” he says.

Their performance can be affected by interest rates, property valuations and cap rates, among other factors.

What does an investor get instead of owning a property?

Consider someone who already owns a few residential properties and a commercial property.

Buying another property could increase rental income, but it would also increase concentration. More money would be locked into physical assets, and the investor would have to deal with tenants, maintenance, vacancies and eventual sale of the property.

A REIT changes that equation.

Muni points out that REITs and InvITs offer regular income, diversification and a lower entry ticket size, while providing exposure to income-generating real estate and infrastructure without the operational responsibilities of direct ownership.

There is also a liquidity difference.

A physical property can take months to sell and involves significant transaction costs and paperwork. Listed REITs and InvITs can be bought or sold through the market.

But Muni cautions against treating this as equivalent to the liquidity of large listed stocks.

The REIT and InvIT segment is still relatively new in India, he says, and liquidity and market depth are still evolving. During stressed market conditions, this can mean higher price volatility and less efficient execution for large transactions.

So the comparison is not simply property versus REIT = illiquid versus liquid.

It is more nuanced.

REITs are giving wealthy investors access to a much larger property pool

The scale of the underlying assets is another reason these vehicles are becoming relevant.

The report says the six listed REITs together own or manage more than 200 million square feet of Grade-A commercial real estate, with gross AUM of approximately ₹3.12 lakh crore in Q4 FY26.

That means an investor buying a REIT unit is not betting on one building.

The underlying portfolio can contain multiple properties, tenants and locations.

This diversification is one of the key differences from directly buying a second commercial property.

As Muni puts it, physical property can provide rental income and long-term appreciation, but it also “concentrates capital in a single property, location and tenant profile” and requires greater operational management.

A REIT, by contrast, provides exposure to a portfolio of income-generating assets.

That does not remove risk. It changes the nature of the risk.

InvITs take the same idea beyond property

The same shift is happening in infrastructure.

InvITs allow investors to gain exposure to assets such as roads, power transmission infrastructure, telecom and other infrastructure projects without directly owning those assets.

The report says India has approximately 28 registered InvITs, public and private, collectively managing more than ₹7.1 lakh crore of assets. Roads account for 44% of this AUM, optical fibre 30%, telecom 14% and power 8%.

The underlying investment logic is similar to REITs: investors participate in cash flows generated by real assets rather than buying the physical infrastructure themselves.

The report describes infrastructure and InvITs as providing “stable cash flows” and a defensive-income role in a portfolio.

For wealthy families, this creates another source of real-asset exposure outside traditional property.

Why this matters for family offices

There is a larger change taking place underneath this shift.

Earlier generations of family offices were largely concerned with preserving wealth. Their portfolios were more concentrated in traditional assets such as real estate, equities and fixed income.

The report says that as wealth pools have expanded, the focus is increasingly shifting from wealth preservation to wealth creation and capital deployment.

The next generation is also becoming more comfortable with private markets and alternatives.

The report says that family offices are increasingly moving towards diversified, institutionally constructed portfolios. It estimates that the proportion of family offices with a 20%–30% alternative allocation could rise from about 12% in 2024 to around 25% in the coming years.

So, the decision is no longer necessarily:

“Should I buy another property?”

It is increasingly:

“How much exposure do I want to real estate, infrastructure and other real assets, and what is the most efficient way to get it?”

The attraction is income — but investors should look beyond the yield

For a wealthy investor, a 6%–9% distribution yield can look attractive, particularly when the investment also provides exposure to real assets.

But chasing the highest distribution yield can be dangerous.

Muni says investors should look at the “sustainability and quality of these cash flows rather than simply chasing the highest yield.”

For REITs, that means looking at factors such as occupancy, tenant concentration, rental growth, property valuations and interest-rate sensitivity.

For InvITs, the quality and stability of the underlying cash flows, leverage and refinancing conditions become important.

The report also makes the broader case for real assets: commercial real-estate leases can have escalation clauses, while infrastructure revenues can be linked to usage-based tariffs that adjust over time, providing some degree of inflation protection.

This is particularly relevant for family offices that have a multigenerational investment horizon.

The report says real assets such as farmland, commercial real estate and infrastructure can appreciate over long periods while generating current income, offering families both capital appreciation and regular income distribution.

But don’t mistake REITs and InvITs for fixed-income products

This is perhaps the biggest point an investor needs to understand.

The income may look similar to rent, but the investment behaves differently from owning a property directly — and it is certainly not the same as a fixed deposit.

REIT and InvIT units are listed and market-linked. Their prices can move sharply when interest rates change or when investors reassess the value of the underlying assets.

Muni flags several risks: interest-rate movements, changes in property valuations and cap rates, occupancy and tenant concentration for REITs, and cash-flow stability, leverage and refinancing conditions for InvITs.

The report’s own asset-allocation framework classifies REITs and InvITs as medium-risk assets rather than low-risk investments. It also puts their approximate correlation with equities at 0.30–0.45 for REITs and 0.20–0.35 for InvITs.

So, these are diversification tools — not substitutes for a safe debt instrument.

What should an affluent investor do?

Interestingly, Muni is cautious about recommending the segment simply because of its headline yield.

“Considering the liquidity challenges and lack of track record, it is not suggested for investors to invest in this segment,” he says, adding that for the debt portion of a portfolio, investors could instead consider arbitrage funds, which he says typically yield around 6%–7% and offer greater liquidity.

That is an expert’s portfolio view, rather than a conclusion drawn from the EY-Julius Baer report. It also highlights an important point: a wealthy investor does not necessarily need REITs or InvITs simply because they generate income.

The question is what role the investment plays in the overall portfolio.

For someone already heavily exposed to physical property, a REIT could potentially add diversification within real assets. For someone with little or no property exposure, buying a REIT is a very different decision.

And for someone primarily looking for stable, liquid income, other instruments may be more appropriate.

The bigger shift: from owning property to owning the cash flows

India’s wealthy families are not abandoning real estate.

The EY-Julius Baer report explicitly says that real estate, including global real estate, continues to be a key investment area for family offices.

What is changing is the way that exposure is being built.

A family office that already owns several properties may not want to keep increasing concentration in physical real estate. Instead, it can look at REITs for commercial real-estate exposure, InvITs for infrastructure cash flows and other alternatives for different sources of return.

That is why the story is bigger than just REITs.

India’s wealthy are not necessarily looking to own less real estate. They are increasingly looking to own real estate — and the income it generates — in a more diversified way.

And for investors who have spent generations equating property ownership with wealth, that is a significant change in mindset.

Source: Indian family office playbook: Now, next and beyond, EY and Julius Baer, 2026. Figures and observations attributed to the report are based on the report and its cited sources. Expert views from Chirag Muni, Executive Director, Anand Rathi Wealth Limited.

Disclaimer: This story is for informational purposes only and does not constitute investment advice. REITs and InvITs are market-linked investments and are subject to market, interest-rate, liquidity, valuation and underlying-asset risks. Investors should assess their risk profile and consult a qualified financial adviser before making investment decisions.

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