Retail investors’ interest in REITs picking up gradually

Vijay C Roy

Chandigarh, June 26

Want to invest in commercial real estate without purchasing the property and by just buying a share as low as Rs 100–Rs 400 per unit? Yes you read right. This is where the Real Estate Investment Trust (REIT) comes in, where, one can invest in commercial real estate without purchasing the property by just buying a share.

Amid low awareness, the investment is yet to catch fancy of the investors but gradually it is picking up.

Just like mutual funds invest individual money into securities like equity, debt, money market instruments etc., REITs invest in real estate and are listed on stock exchanges that allow investor’s exposure to real estate without having to purchase or manage properties.

It allows investors to invest in and profit from commercial real estate, which is not otherwise easily accessible to small retail investors. Although the investment is yet to catch fancy of the investors but slowly and gradually it is picking up.

In India, the concept of Real Estate Investment Trust is relatively new and the first REIT namely Embassy Office Parks REIT was listed in 2019. There are currently only four REITs available for investment in India – Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust and Nexus Select Trust REIT. Currently, all REITs combined have 2.3 lakh investors.

Govardhan Gedela, Head Corporate Finance, Mindspace Business Parks REIT, said: “REITs in India are increasingly favoured for offering investors access to Grade A commercial real estate in a transparent and highly regulated framework. REITs serve as an alternate investment avenue for diversifying portfolios, as we are required to distribute at least 90% of our net distributable cash flow to unit holders, ensuring regular income.

Investors also stand to gain from potential capital appreciation. We are pleased to engage with stakeholders in Chandigarh to raise awareness about REITs and eagerly anticipate welcoming more unit holders from this region.”

The four REITs comprise over Rs 86,000 crore of equity market capitalisation, encompass 115+ million square feet of commercial space, and span the Indian office and retail sectors. Also, over Rs 17,000 crore distributed by Indian REITs in the past four years, more than the entire Nifty Realty Index combined.