REITs in India 2024 (Complete Overview)

Real Estate Investment Trusts (REITs) are companies that operate real estate to earn income. Investors can invest in REITs through stock, mutual funds, and exchange-traded funds. Read this article to know more about listed REITs, their types, and how to invest in REITs in India.

What Is REIT?

Real Estate Investment Trust (REIT) is a company that acquires and manages real estate to gain income.

Such companies are corporations that process high-value real estate property and mortgage portfolios.

Here, real estate properties are provided to lease and collect rent on a timely basis.

And collected rent is further distributed to shareholders as dividends and income.

Properties that REITs manages are infrastructure, data centers, apartments, healthcare units, complexes, etc.

Types Of REITs In India

Below provided are the types of REITs in India.

• Equity

Equity REITs are the most popular among all other types of REITs.

Here, commercial properties are operated and managed to generate income.

In equity REITs, rent is the main source of income.

• Mortgage

Mortgage REITs are also known as mREITs. 

This type of REITs focuses on lending money to the business or property owners and providing a mortgage facility.

Mortgage REITs earn income from the interest gained on money lend to businesses or property owners.

• Hybrid

Hybrid REITs are a possibility for the investor to invest money in both equity and mortgage REITs.

Here, interest and rent both are income-generating aspects in hybrid REITs.

• Publicly Traded REITs

In this type of REIT, it holds the shares that got enlisted on National Securities Exchange. And those shares are regulated by the SEBI.

Every individual can purchase and sell those shares through NSE.

• Publicly Non-Traded REITs

In this type of REIT, non-listed shares are got registered with SEBI. 

But they are not got traded on NSE. 

These REITs are considerably more stable as they don’t get affected by market fluctuations.

• Private REITs

In this type of REIT, the process and functions are held privately. Because they serve only selective and limited investors.

Private REITs are not registered under SEBI. And also not traded on NSE.

Criteria Of The Company To Qualify As REITs In India

The companies with the below-mentioned criteria make it to qualify as REITs.

• It is structured as a corporation or business trust.
• A board of directors or trustees manages the company.
• It provides transferable shares.
• It has at least 100 shareholders.
• It has to provide a minimum of 90 percent of taxable income to the shareholders as dividends.
• It should gain at least 75 percent of its gross income from rents or mortgage interests.
• It should have up to 20 percent of its assets included as stock in taxable REITs subsidiaries.
• It should have at least 75 percent of its investment assets under real estate.
• Al least 95 percent of the REITs total income should get invested.

Listed REITs In India 2024

The below-mentioned are the listed REITs in India currently.

• Embassy Office Parks REIT is the first REIT in India. And it was launched in April 2019. It is owned by Blackstone Group.
• Mindspace Business Parks REIT got oversubscribed by 12.96 times during its IPO in 2020. Here, an oversubscribed IPO specifies that it received more applications compared to the total shares offered.
• Brookfield India REIT was launched in 2022. And it initiated the REIT issue of Rs. 3800 crores.

Who Should Invest In REITs In India 2024?

REITs operates major real estate properties. And for this reason, it stands as one of the most risky and expensive types of investments.

Here investor should be the one who has the huge capital in his/her hand.

Endowments, insurance companies, pension funds, bank trust departments, etc are the investors who are having the capability to invest in REITs.

How To Invest In REITs In India 2024?

Every investor can decide to buy shares in REIT which is listed on the stock exchange.

REIT investment can be done in the following ways.

• Stock

Investors seeking to directly invest in REITs should prefer to do so through stocks.

• Mutual Funds

Investors seeking for diversifying their investments portfolio should invest through mutual funds.

This is an indirect method of investing. So the investor has to fund in REIT through a mutual fund company.

• Exchange Traded Funds

By this method, investors can gain indirect ownership of properties. 

And they will also have the benefit of diversifying the funds.

REIT is a kind of mutual fund investment. Because REITs prefers investing in properties. Whereas, mutual funds prefer investing in stock options or bonds.

The added advantage of investing in REIT is investors can have guidance from financial advisors to help them with investment decisions.

You can check out invest In Real Estate In India to know the main difference between investing in REIT & Mutual funds, and other ways of investing in real estate.

Tips On How To Buy Best REITs In India 2024

Investors can have a successful investment in REIT if they follow the tips mentioned below.

• While selecting REIT, an investor should check on which corporation has a positive record in providing high dividend yields. And the possibility of capital appreciation in long run.
• Diversifying the investment portfolio by buying the shares through the stock exchange will be helpful.
• Investor should find a REIT that has diverse opportunities for tenants and properties.
• Investors should try mutual fund and ETF options that invest in REITs. Since they will receive assistance from financial advisors.
• Investors should invest in companies that have years of experience in their field. 

By following these ways you can easily seek investment opportunities and income as well.

Advantages Of REITs In India

Investing in REIT comes with various advantages. The most significant ones are mentioned below

• Dividend Income And Capital appreciation

By investing in REITs in India, investors can earn stable dividend income. And they can also gain stable capital appreciation over long periods.

• Diversification

As REITs in India are being traded on the stock exchange, it allows investors to diversify their investment in the real estate sector.

• Liquidity

As major REITs in India are being traded on the public stock exchange, this makes them easily buy and sell.

So this helps in the liquidity of the invested capital.

• Transparency Over Deal

As it is regulated by SEBI, REITs need to file a financial report that is audited by professionals.

And this will help investors to gain information regarding taxation, zoning, and ownership. This makes the process transparent.

Disadvantages Of REITs In India

Investing in REITs hold the following disadvantages for investors.

• No Tax-benefits

The possibility of gaining tax benefits under REITs is too less. 

This is because dividends gained from investment in REITs companies are taxed as per the law.

• Low Growth Prospect

The ability of capital appreciation is a little low in REITs.

This is because the companies have to return 90 percent of their earnings as dividends to investors. 

And they can only reinvest 10 percent of that earnings into their business.

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