For a very long time Real Estate was not accessible to the general public due to its heavy capital size requirements and other issues like liquidity. REITs are an amazing solution to this problem. REITs or Real Estate Investment Trust borrows money from people and hunts for properties that can potentially give better returns.
The trust invests the money collected in properties and manages them professionally. They give out the properties on lease to big companies and institutions for a long time. Thus ensuring regular rental income. REITs are listed on stock exchanges like BSE and NSE.
India currently has three REITs. Brookfield India Real Estate Trust, Embassy Office Parks REIT and Mindspace Business Parks REIT. You can start investing in REITs just like how you buy shares via your broker/broking app from the stock exchange.
Some salient features of REITs
1. According to rule, 90% of PAT of the REITs has to be distributed to its investors in form of dividends. Thus having a dividend yield of 6-7%.
2. REITs were introduced in India in 2014 and as of the date, there are three such REITs.
3. REITs are regulated by SEBI so it is totally safe to invest in this instrument.
4. Earlier the minimum investment amount for IPOS in REITs used to be Rs. 50,000 which has now been reduced to Rs. 10,000 to Rs. 15,000.
5. REITs are also a part of indices like NSE 500, Nifty Midcap 150 and Nifty Smallcap 250.
6. REITs have beaten the S&P benchmark returns in the past. Though there are certain risks associated with REITs, as it is a new kind of investment avenue, with time it’ll evolve and create new doors of opportunities for investors.
Disclaimer – This is not investment advice. Please do your own research before investing