The idea of financialization of real estate is fast catching up in India. Investors – both traditional and new-age, domestic and global – have off late been quite fascinated with the idea of greater liquidity and stability of their investment at a time when financial markets have been quite volatile and real estate prices have grown exponentially post-pandemic.
In such an environment, investors look to safeguard their investment; and SEBI regulated instruments like Alternative Investment Fund (AIF) and Real Estate Investment Trust (REIT) have played a key role in ushering this transformation.
To put things in perspective, SEBI first introduced AIFs in 2012 and REITs in 2014. Despite starting on a slow pitch, both these instruments have gained tremendous popularity and investment.
According to Indian REITs Association, as of Q3 FY26, the total gross Assets Under Management (AUM) of the Indian REIT market stands at over Rs 2,50,000 crore. The five publicly listed Real Estate Investment Trusts (REITs) in India have collectively distributed over Rs 2,450 crore to more than 3.8 lakh unitholders during the third quarter of FY26. India’s listed REITs include Brookfield India Real Estate Trust, Embassy Office Parks REIT, Knowledge Realty Trust, Mindspace Business Parks REIT and Nexus Select Trust.
As of late 2025, India’s Alternative Investment Fund (AIF) industry has experienced rapid growth, with total commitments reaching Rs 15.74 lakh crore by December 31, 2025, and registered AIFs surpassing 1,700, according to SEBI data. Category II remains a dominant sector with commitment of Rs 11.64 lakh crore. Out of the Rs 6.45 lakh crore investments made, real estate dominated with Rs 75,250 crore followed by financial services at Rs 59,480 crore. Other sectors include IT, NBFCs, Banks, pharma, insurance etc.
Ankur Jalan, CEO, Golden Growth Fund, a category II real estate focussed Alternative Investment Fund designed for South and Lutyens Delhi said AIFs have revolutionised the financial market by combing growth, stability and flexibility and becoming a major source of investment.
“AIFs have effectively financialized real estate into high-performance financial instruments. Through sophisticated structures, AIFs have democratized access to institutional-grade developments, enhanced transparency, and injected much-needed liquidity into the sector. It has not just changed how people invest in real estate; it has helped integrate real estate into the global digital portfolio, ushering in an era where property is as dynamic, measurable, and accessible as any equity or bond.”
AIFs and REITs allow better liquidity and easy entry and exit. Investors can participate in high-quality real estate assets with significantly lower ticket sizes compared to direct property ownership. While the minimum investment in AIFs is just Rs 1 crore, REITs are traded on stock exchange and a unit can be bought for as low as Rs 100!
In comparison, physical real estate requires high ticket investment and comes with complicated entry and exit routes – from identifying to buying, documentation, construction, possession, maintenance and an equally tougher sale procedure. Besides, property prices have grown exponentially over the past few years attributed both to the increase in input cost and growing aspirations of investors. As a result, fewer sub-Rs 1 crore units are today available not just in metros but also tier 2 cities thereby crowding out a major chunk of genuine investors and bringing in either premium buyers or speculators.
However, certain experts believe in times of uncertainties, investment in plotted developments tend to take centre stage.
Lalit Parihar, MD, Aaiji Group, a Dholera-based real estate company said in times of uncertainties when housing prices have shot over the roof and geopolitical tensions are affecting sales, plotted developments see greater investment flow as investor play safe.
“Plotted developments have emerged as a preferred investment choice due to their relatively lower capital commitment and minimal dependency on interest rate movements that may be impacted by the ongoing crisis. Plots offer flexibility, faster liquidity, no property maintenance and a perceived downside protection, making them an attractive option for both end-users and investors. We are witnessing a clear shift toward land-led investments, as buyers seek tangible assets with long-term appreciation potential and lower execution risk.”