With only a few thousand rupees, you may access real estate via REITs; you do not need crores.
Real estate has always been the ideal investment for the majority of Indians. But let us be honest: purchasing an apartment or office space entails hefty down payments, recurring fees, and a ton of paperwork. Real Estate Investment Trusts (REITs) may help with that. They enable you to make real estate market investments without really owning any real estate.
What is a REIT, exactly?
Similar to a mutual fund, a REIT combines the capital of several investors to purchase and manage commercial real estate rather than equities or bonds. These consist of warehouses, hotels, shopping centers, and office buildings. Investors get a portion of the rental revenue, often in the form of dividends.
The reasons for the rise in popularity of REITs in India
Though they are still relatively new, India’s listed REITs, such as Embassy Office Parks, Mindspace Business Parks, and Brookfield India, are already attracting interest. With city real estate values skyrocketing, REITs allow investors to purchase Grade-A real estate for as little as Rs 10,000. They are also significantly more liquid than real estate as you can buy and sell units like shares since they are listed on stock markets.
How REITs generate revenue for investors
Regular dividend payments from rental revenue and capital appreciation when the value of REIT units increases are the two primary methods to make money. Generally speaking, Indian REITs must provide investors at least 90% of their net distributable cash flows, which implies consistent income potential.
Hazards you should be aware of
REITs are not without risk. The demand for rentals and occupancy levels have a significant impact on their success. Rental revenue may decrease if companies reduce their office space or if malls witness a decline in patronage. Additionally, the price of REIT units might change in response to changes in interest rates and investor mood, just like any other market-traded investment.
How to Invest in Indian REITs
Investing is easy since, similar to purchasing equity shares, you may purchase units directly from stock markets (NSE/BSE). Another option is to invest via mutual fund schemes that own REITs. It is inexpensive to enter, requires little paperwork, and exposes you to a wide variety of properties.