India’s real estate market has undergone significant transformation over the past decade, with increasing institutional participation and regulatory improvements. One of the most innovative financial instruments to emerge in this space is the Real Estate Investment Trust (REIT), which allows investors to gain exposure to the real estate sector without directly owning property.
For those looking to diversify their investment portfolio, REITs offer a unique opportunity by combining the benefits of real estate investment with the liquidity of stock market trading. Just as investors can buy bonds online in India for steady fixed-income returns, REITs provide a structured way to earn passive income from real estate.
What Is a REIT?
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate assets. REITs work similarly to mutual funds by pooling money from multiple investors and using it to purchase, manage, and lease large-scale commercial properties such as office buildings, shopping malls, warehouses, and hotels.
In India, REITs are regulated by the Securities and Exchange Board of India (SEBI), ensuring transparency, investor protection, and efficient operations.
How Do REITs Work in India?
REITs function by:
1 Raising Capital from Investors – Just like stocks or bonds, investors can buy units of a REIT, making them part-owners of a diversified real estate portfolio.
2 Owning & Managing Real Estate Assets – REITs lease out properties to generate rental income, which is distributed among unit holders.
3 Earning Regular Income & Capital Gains – Investors receive a portion of the rental income, and they can also benefit from appreciation in property values by selling the REIT units in the exchanges for capital gain.
4 Trading on Stock Exchanges – REITs are listed on NSE & BSE, providing liquidity and making real estate investment more accessible.
Types of REITs in India
- Equity REITs – These own and operate income-generating properties, distributing rental income to investors.
- Mortgage REITs (mREITs) – These finance real estate projects by providing loans and earning interest income.
- Hybrid REITs – A combination of Equity and Mortgage REITs, managing both physical properties and mortgage financing.
Key Features of REITs in India
Diversified Real Estate Exposure
REITs provide access to large commercial real estate portfolios, reducing the risk of investing in a single property.
Regular Income Distribution
SEBI mandates that REITs must distribute at least 90% of rental income to unit holders, ensuring consistent cash flow for investors.
High Liquidity Compared to Direct Real Estate
Unlike physical real estate investments, which involve high costs and illiquidity, REITs can be easily bought and sold on stock exchanges, similar to stocks and bonds in India.
Lower Investment Barrier
Owning commercial real estate requires crores of rupees, while investors can buy REIT units for as little as ₹10,000–₹50,000, making them more affordable for retail investors.
Tax Efficiency
- Dividend income from REITs may be partially or fully tax-exempt, depending on the structure.
- Capital gains tax applies when investors sell REIT units, similar to stocks.
Top REITs in India
India currently has three publicly listed REITs:
1 Embassy Office Parks REIT – India’s first REIT, owning commercial office spaces leased to multinational companies.
2 Mindspace Business Parks REIT – Focuses on IT parks and commercial office spaces.
3 Brookfield India REIT – Aims at high-quality office properties in major business hubs.
REITs vs. Bonds: Which One Should You Choose?
While REITs provide rental income and potential capital appreciation, bonds offer fixed interest payments. Investors seeking steady passive income with lower volatility often prefer to buy bonds online in India, while those comfortable with real estate exposure and some market fluctuations may opt for REITs.
Comparison Table
Feature | REITs | Bonds |
Investment Type | Real Estate Ownership | Fixed-Income Instrument |
Returns | Rental Income + Capital Gains | Fixed Interest Income + Capital Gains |
Liquidity | Traded on Stock Exchanges | Traded in Bond Market |
Risk | Market-driven, Moderate Risk | Lower Risk, Fixed Returns |
Taxation | Taxable Dividends & Capital Gains | Interest Taxable at Slab Rate |
For diversified investments, many investors combine REITs and bonds to balance risk and returns.
How to Invest in REITs in India?
Investing in REITs is simple and similar to buying stocks or bonds online in India:
1 Open a Demat & Trading Account – Required to purchase REIT units from NSE/BSE.
2 Research & Compare REITs – Analyze rental yields, property locations, and management efficiency.
3 Buy & Hold REIT Units – Investors can trade REITs in the stock market like shares.
4 Track Returns & Market Trends – Monitor rental distributions and capital appreciation potential.
Final Thoughts
For investors looking to gain exposure to India’s real estate market without direct property ownership, REITs offer a convenient, low-cost, and liquid alternative. With regular rental income, capital appreciation potential, and stock market trading flexibility, REITs have become a promising asset class in India's investment landscape.
At the same time, investors seeking stable, predictable income with lower risk may prefer buying bonds online in India, particularly tax-free or corporate bonds. A balanced investment strategy that includes both REITs and bonds can help investors achieve long-term financial growth with controlled risk exposure.
