"In the US, the REIT market is over $1 trillion. Ours is just about $40–50 billion today, but it’s growing rapidly. Over the next decade, we’ll see retail, warehousing, hospitality, and even data centre REITs come to market," said Kunal Moktan, co-founder and CEO of Alt.

Sebi has made REITs more accessible by lowering ticket sizes and classifying them as equity, thereby attracting significant liquidity. Moktan said, “The next major milestone will be when a REIT joins the Nifty 50. That will unlock opportunities for passive funds like Vanguard and Fidelity to invest, boosting prices and volumes further.” The trend is clear — REITs and InvITs are here to stay, and their strength is only growing.

For over a decade, Moktan has been on a mission to make alternative investments accessible to individual investors. From starting his career at Blackstone to launching India’s first Small and Medium Real Estate Investment Trust (SM-REIT), Moktan has been instrumental in shaping the country’s institutional real estate investing ecosystem.

In this exclusive conversation with Fortune India, he shares how Alt evolved, how REITs and InvITs are maturing in India, and why investors can no longer afford to ignore this hybrid asset class.

Excerpt

Q. How did your journey begin, and what led you to start Alt?

Kunal: I began my career with Blackstone in 2007, straight out of business school in Ahmedabad. That was also when Blackstone set up its first Asia office in Mumbai. Over the next eight years, our team became the largest real estate investor and office landlord in the country. We acquired assets from Embassy, Panchshil, Raheja, and Salarpuria, which later formed the backbone of India’s first REITs when the regulations came out in 2019–20.

After leaving Blackstone, I co-founded Alt in 2015 with my batchmate, Hashim Khan. Our goal was simple — to give individual investors access to the kinds of alternative assets that were earlier limited to institutions, pension funds, and ultra-high-net-worth investors. We began with Property Share, India’s first fractional ownership platform for commercial real estate. We securitised assets long before Sebi even had a framework for it. When Sebi introduced the SM-REIT regulations last year, they were actually based on the white paper we had submitted. We became the first to receive an SM-REIT licence and the first to list an asset — a ₹353-crore office building in Bengaluru. Our second listing, a ₹470-crore property in Thane, followed in August this year.

Q. So Alt has really been at the forefront of building this new investment ecosystem. What other products do you offer today?

Kunal: We now operate across three verticals. First, our SM-REITs — the small and medium real estate investment trusts I mentioned — which are fully regulated and accessible to individual investors. Second, our portfolio management service (PMS) product, which invests in listed REITs and InvITs both in India and overseas. And third, our private credit funds, which lend to real estate-backed or private corporate borrowers.

In the PMS, we invest in India-listed REITs and InvITs, as well as global REITs and InvITs in markets such as the US, the UK, and Europe. On the private side, we manage Category II AIFs, offering investors direct exposure to yield-generating debt instruments.

Q. Many investors still find REITs and InvITs confusing. How do you educate potential investors about these products?

Kunal: Education is critical. We run a regular newsletter explaining how REITs and InvITs work and distribute it widely through email and social media. But we also work closely with industry bodies — the India REIT Association, the India InvIT Association, and the India SM-REIT Association — which are all focused on investor awareness.

REITs and InvITs are not as new as people think. The first REIT was listed in India in 2019, and today we have five listed REITs and 26 registered InvITs. The government and SEBI have done a commendable job of advancing this asset class.

Q. How do you see retail investors participating in this space?

Kunal: Retail participation has already picked up meaningfully. REITs and InvITs are perhaps the only hybrid products in the Indian market that provide both a 6–8% dividend yield and capital appreciation potential. That’s a very attractive proposition — you don’t get that mix anywhere else. As more asset owners and private equity funds list their portfolios, this market will only get bigger.

Q. How does Alt select and evaluate commercial real estate assets before listing them as SM-REITs?

Kunal: We focus on grade-A assets in top-tier cities such as Bengaluru, Mumbai, Pune, and Hyderabad — locations where demand consistently outstrips supply, especially from global capability centres (GCCs). We prefer blue-chip tenants, long-term leases (typically nine years), and stable rent yields.

Our first two SM-REITs were listed at 9% yields, compared to 5.5–6% for large listed REITs. That premium reflects both the quality of the assets and our pricing discipline.

Q. You also run a PMS. How does investing through that differ from directly buying a property or a single REIT?

Kunal: The main difference is diversification. If you buy a single property, your exposure is concentrated in one asset, one location, and one tenant. With a PMS, you can invest across multiple REITs and InvITs — different cities, different asset types, and different tenant bases.

A direct investor might buy one office building. A REIT investor, on the other hand, owns a slice of several buildings across cities. That’s why we see REITs as a way to balance risk and return, sitting right between equities and debt.

Q. Who typically invests in your PMS products?

Kunal: PMS investors must invest at least ₹50 lakh, as per SEBI norms. So they tend to be people in their 30s to 70s — professionals, entrepreneurs, and retirees who have already built their core portfolios. The PMS appeals to them because it offers inflation-linked returns of 7–8%, with lower volatility than equities.

In fact, the REIT index is 33% less volatile than the Nifty 50, and its correlation with the Nifty is only 0.23. That means even if the stock market dips, REITs don’t move in tandem — steady cash flows back them.

Q. What risks should investors keep in mind?

Kunal: The main risks are macroeconomic — like a slowdown in leasing activity, or a decline in India’s cost advantage that discourages global firms from expanding here. These could affect rent growth and occupancy, which ultimately impact yields. But those are long-term cyclical risks, not structural flaws.

Q. And finally, how should investors evaluate a REIT before buying?

Kunal: Look beyond headline numbers like dividend yield or P/E ratio. We analyse each REIT by valuing every individual office building it owns, then aggregating those values to calculate the net asset value (NAV). We compare that NAV with the REIT’s market capitalisation to identify under- or over-valued opportunities.

If the market price is far above the underlying asset value, it’s overvalued — you wait. If it’s below, you buy. Investors should also check occupancy levels, tenant quality, and corporate governance. Even insider activity — whether promoters are buying or selling — is a useful signal.