Want to know how to invest in REITs Real Estate Investment TrustsIndia? Real Estate Investment Trusts (REITs) are revolutionizing how Indian investors access commercial real estate markets. Instead of needing ₹30 lakhs to buy property, you can start investing in REITs with just ₹10,000 and earn regular dividends from premium office spaces and retail malls.
This comprehensive guide will walk you through everything you need to know about how to invest in REITs India, from understanding the basics to selecting the best real estate investment trusts for beginners.
What Are REITs Real Estate Investment Trusts and How Do They Work?
When learning how to invest in REITs Real Estate Investment Trusts India, it’s essential to understand what REITs are. A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate properties. REITs are corporations that manage the portfolios of high-value real estate properties and mortgages. For instance, they lease properties and collect rent thereon. The rent thus collected is later distributed among shareholders as income and dividends.
REITs function similar to mutual funds but exclusively invest in real estate assets. Like Mutual Funds, REITs pool capital from numerous investors to invest in commercial properties. In return investors receive Income in the form of dividend & interest at regular intervals.
Key Features of REITs in India:
- SEBI Regulated: Listed REITs Real Estate Investment Trusts are regulated by SEBI and must adhere to strict disclosure requirements, providing investors with detailed information about their operations and finances
- Mandatory Distribution: 90% of the income must be distributed to the investors in the form of dividends
- Stock Exchange Listed: REITs trade on NSE and BSE like regular stocks
- Professional Management: Experienced teams handle property operations and tenant relationships
Also Read: 50/30/20 Rule for Personal Finance
Types of REITs Available in India
Understanding different REIT Real Estate Investment Trusts categories helps you choose the best real estate investment trusts for beginners. Here are the main types available when you invest in REITs India:
1. Equity REITs
The most common type in India, these REITs Real Estate Investment Trusts own and operate income-producing real estate properties. They generate revenue primarily through rental income from office buildings, retail spaces, and warehouses.
2. Mortgage REITs
These REITs lend money to real estate developers and property owners, earning income through interest payments on loans and mortgages.
3. Hybrid REITs
A combination of equity and mortgage REITs, providing diversified exposure to both property ownership and real estate financing.
How to Start Investing in REITs: Step-by-Step Guide
Step 1: Open a Demat Account
You’ll need a demat account with any registered broker (Zerodha, Groww, ICICI Direct, etc.) to buy and sell REIT units.
Step 2: Complete KYC Requirements
Ensure your KYC (Know Your Customer) documentation is complete, including PAN card, Aadhaar, and bank account details.
Step 3: Research and Select REITs
Analyze different REITs based on:
- Dividend yield history
- Occupancy rates: A higher occupancy rate indicates stronger rental income for the REIT. Look for REITs with historically high occupancy rates
- Geographic diversification
- Tenant quality and lease terms
Step 4: Place Your Order
Minimum investment typically starts at ₹10,000-15,000. You can buy REIT units during market hours just like stocks.
Step 5: Monitor Your Investment
Track quarterly results, dividend announcements, and portfolio additions or disposals.
Best REITs Real Estate Investment Trusts in India for Beginners (2025)
Here are the best real estate investment trusts for beginners looking to invest in REITs India:
1. Embassy Office Parks REIT
- Focus: Premium office spaces in Bengaluru, Mumbai, Pune
- Highlights: India’s first REIT with strong tenant base including multinational corporations
- Average Dividend Yield: 7-8% annually
- Occupancy Rate: 85-90%
2. Mindspace Business Parks REIT
- Focus: Grade A office parks across Mumbai, Pune, Hyderabad
- Highlights: Mindspace Business Parks REIT focuses on Grade A office spaces across key metropolitan cities, catering to robust net profit margin of 29.86%
- Average Dividend Yield: 6-7% annually
- Occupancy Rate: 80-85%
3. Brookfield India Real Estate Trust
- Focus: Commercial real estate across major cities
- Highlights: Backed by global real estate giant Brookfield Asset Management
- Average Dividend Yield: 6-8% annually
- Occupancy Rate: 85-90%
4. Nexus Select Trust
- Focus: Retail malls and shopping centers
- Highlights: India’s first retail REIT with premium mall properties
- Average Dividend Yield: 8-10% annually
- Occupancy Rate: 75-80%
Tax Implications of REIT Real Estate Investment Trusts Investments
Understanding taxation is crucial when you invest in REITs India. Here’s what beginners need to know about REIT taxation:
Dividend Taxation
If REIT pays tax under section 115BAA, dividend will be taxable as per the tax slabs. TDS @ 10% will be applicable. Similar taxation rules apply for non-resident investors, with variations like a 20% tax on dividends.
Capital Gains Tax
- Short-term (held less than 36 months): Taxed as per your income tax slab
- Long-term (held more than 36 months): 20% with indexation benefits
TDS (Tax Deducted at Source)
REITs deduct 10% TDS on dividend payments. You can claim this as tax paid when filing your returns.
Important Note
REITs are of not much help when it comes to tax benefits since the income is taxable in the hands of unitholders at the applicable tax rates.
REITs vs Direct Property Investment: A Comparison
| Factor | REITs | Direct Property |
| Initial Investment | ₹10,000-₹50,000 | ₹30 lakhs-₹1 crore+ |
| Liquidity | High – Trade anytime | Low – Takes months to sell |
| Management | Professional teams | Self-managed |
| Diversification | Multiple properties | Single property risk |
| Income | Regular dividends | Monthly rent (minus expenses) |
| Transparency | SEBI-regulated disclosures | Limited transparency |
Key Metrics to Evaluate REITs
1. Funds From Operations (FFO)
A key measure of REIT operating performance, calculated as net income plus depreciation and amortization.
2. Net Asset Value (NAV)
The per-unit value of REIT’s underlying real estate assets.
3. Occupancy Rate
Focus on sustainable dividend growth over high initial yields. Occupancy Rate: A higher occupancy rate indicates stronger rental income for the REIT.
4. Debt-to-Equity Ratio
Lower ratios indicate better financial stability and lower risk.
5. Dividend Yield Sustainability
Look for REITs with consistent dividend payments over multiple quarters.
Risks Associated with REIT Investments
Market Volatility
REITs can be subject to fluctuations in the real estate market, leading to inconsistent returns. Unit prices can decline during market downturns.
Interest Rate Sensitivity
Rising interest rates can negatively impact REIT valuations as borrowing costs increase and alternative investments become more attractive.
Property-Specific Risks
- Tenant defaults or non-renewal of leases
- Location-specific economic downturns
- Regulatory changes affecting real estate
Liquidity Risk
While REITs are listed, trading volumes can be low during market stress, potentially affecting your ability to sell quickly.
Investment Strategies for REITs Real Estate Investment Trusts Beginners
1. Start Small and Diversify
Begin with ₹10,000-₹25,000 across 2-3 different REITs to spread risk.
2. Focus on Dividend Yield
Target REITs offering 6-8% dividend yields with consistent payment history.
3. Consider Systematic Investment
Invest a fixed amount monthly in REITs (similar to SIP in mutual funds) to average out market volatility.
4. Monitor Quarterly Results
Track occupancy rates, rental income growth, and new property acquisitions.
5. Long-term Perspective
REITs work best as long-term investments (3-5 years) due to their dividend-focused nature.
Future Outlook for REITs Real Estate Investment Trusts in India
The REIT market in India (2025) is a nascent one, but growth prospects remain strong due to:
- Increasing urbanization driving demand for commercial spaces
- Government support through favorable regulatory frameworks
- Growing institutional participation from pension funds and insurance companies
- Expansion into new sectors like data centers, logistics parks, and healthcare facilities
India’s ambitious infrastructure development goals present significant opportunities for InvIT investors, indicating similar growth potential for REITs.
Frequently Asked Questions Real Estate Investment Trusts
Q1: What is the minimum amount required to invest in REITs?
Minimum investment typically starts at ₹10,000-15,000, making REITs accessible to retail investors.
Q2: How often do REITs pay dividends?
Most REITs in India pay dividends quarterly, though some may pay semi-annually based on their cash flow patterns.
Q3: Are REITs suitable for conservative investors?
Yes, REITs Real Estate Investment Trusts can be suitable for conservative investors seeking regular income, though they carry market risks and are not as safe as fixed deposits.
Q4: Can I invest in REITs through mutual funds?
Currently, there are no dedicated REIT mutual funds in India, but you can invest directly in individual REITs through your demat account.
Q5: What happens if a REIT property becomes vacant?
Vacant properties reduce rental income, potentially affecting dividend payments. However, professional management teams actively work to find new tenants.
Conclusion
REITs Real Estate Investment Trusts offer Indian investors an excellent opportunity to participate in commercial real estate markets without the hassles of direct property ownership. With professional management, regular dividend income, and stock-like liquidity, REITs can be valuable additions to a diversified investment portfolio.
Now that you know how to invest in REITs India, remember that REITs can offer investors greater diversification, potentially bulkier total returns, and lower overall risk when constructing any equity or fixed-income portfolio.
For beginners looking for the best real estate investment trusts for beginners, start with established REITs like Embassy Office Parks or Mindspace Business Parks, focus on dividend sustainability over high yields, and maintain a long-term investment horizon for optimal results when you invest in REITs India.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. REIT investments are subject to market risks. Please consult with a qualified financial advisor before making investment decisions.