A Real Estate Investment Trust (REIT) is an investment vehicle that allows people to pool their money and invest in income-generating real estate such as office space, shopping malls, warehouses, and other commercial properties. Similar to mutual funds, REITs enable retail investors to access high-value real estate without owning or managing the properties themselves. REITs are traded on stock exchanges, making them a liquid and transparent way to invest in real estate.
Why Should You Consider REITs in India?
India’s REIT market is growing rapidly, driven by increasing demand for real estate. The Securities and Exchange Board of India (SEBI) introduced regulations for REITs in 2014, which provided a framework for these investments. In India, REITs must allocate at least 80% of their assets to completed properties, with the remaining 20% ​​potentially invested in under-construction projects or other financial instruments. In addition, they are required to distribute 90% of their net income as dividends to unitholders, making them attractive to investors looking for capital.
Today, India has three publicly traded REITs—embassy parks, Mindspace Business Parks, Brookfield India REIT, Nexus Select Trust and 360 One REIT. The total market capitalization of these listed REITs exceeds Rs 75,000 crores, and is expected to grow further due to urbanization and expansion of commercial areas. According to JLL India, the eligible REIT office stock in India is estimated to be over 300 million sq. ft. in 2025.
How Can You Get Started?
Karan Shetty, Co-Founder, Claravest Technologies suggests the following 4 steps to get started investment in REITs in India:
1. Open a Demat account: You need a Demat account to trade in REITs, like stocks.
2. Research REIT Options: Explore the performance, asset portfolio, and dividend yield of available REITs.
3. Invest through Stock Exchange: Buy REIT units through NSE or BSE. Small investment capital is affordable for retail investors, ranging from ₹10,000- ₹15,000.
4. Track and Diversify: Keep an eye on your investment performance and diversify your portfolio across different REITs if possible.
Small and Medium REIT (SM REIT):
Small and Medium Real Estate Investment Trusts (SM REITs) are a new category of investment vehicles introduced by the Securities and Exchange Board of India (SEBI) to increase access to real estate investments for retail investors. Launched in 2024, SM REITs aim to democratize real estate ownership by allowing them to list real estate sizes between 50 and 500 crores. Additionally, PropertyShare’s latest listings reflect the growing trend of real estate ownership. In conclusion, REITs represent a compelling investment option for those looking to diversify their portfolios and gain exposure to India’s booming real estate sector without the hassle of direct property management. With continued regulatory support and innovations like SM REITs, the future looks promising for retail investors in the Indian real estate space.