Steady Returns, No Hassles: Why REITs Are the New Darling of Indian Investors

Growing Interest in REITs Across Indian Investors

Industry leaders noted that Real Estate Investment Trusts (REITs) have rapidly gained traction in India, offering a smart and accessible entry point into commercial real estate. These instruments are increasingly preferred by retail investors looking for stable returns without the complications of property management.

REITs allow individuals to invest in income-generating real estate assets with relatively lower capital, making them an attractive alternative to traditional real estate purchases.

How REITs Work

Sudarshan Lodha, Co-founder and CEO of Strata SM REIT, explained that REITs function much like mutual funds—except they manage portfolios of commercial properties instead of stocks. He highlighted that with REIT units available for under ₹500 and small and medium REITs requiring a minimum investment of ₹10 lakh, this route is far more accessible than direct property acquisition.

Ramesh Nair, CEO of Mindspace Business Parks REIT, pointed out that REITs are ideal for investors seeking consistent income, diversification, and long-term value. As SEBI-regulated entities, they are bound to distribute at least 90% of their taxable income to unitholders, which ensures regular dividends while maintaining transparency and governance.

Pros and Cons of REIT Investing

According to the Indian REITs Association (IRA), listed REITs in India disbursed ₹1,505 crore to over 2.6 lakh unitholders in Q3 FY25—a 17% rise year-on-year. Lodha outlined key advantages including:

• Consistent income payouts

• Access to high-grade commercial real estate with lower capital

• Potential for long-term capital gains

However, Nair warned that REITs, being market-linked, remain sensitive to economic shifts, interest rate changes, and broader market volatility. He advised investors to assess asset quality, tenant strength, and lease structures before committing funds.

Bright Outlook for India’s REIT Market

The REIT market in India now oversees gross assets worth ₹1.52 lakh crore and holds a market capitalisation of over ₹95,000 crore, as of February 2025. Their portfolios encompass more than 126 million sq. ft. of Grade A office and retail space.

Shrinivas Rao, CEO of Vestian, remarked that a supportive regulatory landscape, higher ROI, and a booming office segment are strengthening the REIT market in India. He expects the sector to diversify into new asset classes as the framework evolves.

Investors are encouraged to consult their financial advisors to ensure that REITs align with their broader investment strategies and goals.

Disclaimer: This article is intended for informational purposes only and should not be construed as financial advice. Please consult a certified financial advisor before making any investment decisions.