Here’s a complete and detailed guide on Real Estate Investment Trusts (REITs) in
India, including their types, structure, regulation, taxation, benefits, risks, and current listed
REITs.
Real Estate Investment Trusts (REITs)
– Complete Guide
What is a REIT?
A Real Estate Investment Trust (REIT) is a SEBI-regulated investment vehicle that
owns, operates, or finances income-generating real estate.
REITs pool money from investors and invest primarily in commercial real estate, offering
returns through rental income and capital appreciation.
REITs allow retail investors to invest in real estate without buying physical property.
Types of REITs (Globally & in India)
1. Equity REITs (Mainly in India)
• Own and operate income-producing commercial properties (e.g., office spaces,
malls, warehouses).
• Income is derived mainly from rentals.
• Investors receive dividends + potential capital gains.
This is the primary form of REITs operating in India.
2. Mortgage REITs (mREITs) (not yet active in India)
• Lend money to real estate owners/developers or buy mortgage-backed securities.
• Earn income via interest payments.
Not common in India due to regulatory and credit market structures.
3. Hybrid REITs
• Combine features of Equity and Mortgage REITs.
• Own properties and finance real estate.
Not available in India yet.
🇮🇳 Structure of REITs in India
REITs are usually set up as trusts registered with SEBI. The structure typically includes:
Role Description
Sponsor Sets up the REIT; must hold a minimum % stake
Manager Manages assets and operations of the REIT
Trustee Holds the REIT assets in trust for unitholders
Unitholders Investors/shareholders in the REIT
SEBI Regulations for REITs (India)
Regulation Requirement
Minimum Asset
₹500 crores of commercial real estate
Value
Public Issue Size Minimum ₹250 crores
Investment Mandate At least 80% in completed and income-generating properties
Minimum 90% of distributable surplus must be distributed to
Rental Income
unitholders
Listing Mandatory on Indian stock exchanges (NSE/BSE)
Leverage Limit Debt cannot exceed 49% of asset value
NAV Disclosure Half-yearly basis
Taxation of REITs (India)
Income Type Taxation
Taxable in the hands of investors if received from SPVs that opt for
Dividend Income
lower tax regime under Sec 115BAA
Interest Income Taxed as per individual slab rates
Capital Gains (on STCG (≤36 months) – 15%; LTCG (>36 months) – 10% (if gains >
REIT units) ₹1 lakh)
Rental Income (by
Taxed at SPV level; REITs distribute net income to unitholders
REIT)
REITs are structured to avoid double taxation, making them more efficient.
Benefits of Investing in REITs
Benefit Explanation
Regular Income REITs are mandated to distribute 90% of income
Diversification Exposure to real estate without physical ownership
Liquidity Listed REITs trade on stock exchanges
Minimum investment as low as ₹10,000–₹15,000 (as per SEBI
Low Entry Point
2021 rules)
Professional
Managed by experienced real estate firms
Management
Risks in REITs
Risk Description
Price may fall due to interest rate hikes or economic
Market Risk
slowdown
Occupancy Risk Lower rentals or vacant office space can reduce income
Interest Rate Sensitivity Rising rates can impact real estate valuations
Liquidity Risk (for new
Some REITs may have lower trading volume
investors)
Concentration Risk Limited diversification (e.g., office-only exposure)
Listed REITs in India (as of 2025)
Approx.
Name Sponsor Focus Key Assets
Yield
Embassy Office Embassy Group + Commercial Bengaluru,
6.5%–7.5%
Parks REIT Blackstone office Mumbai, Pune
Grade-A
Mindspace Business Mumbai, Pune,
K Raheja Corp commercial 6.5%–7.2%
Parks REIT Hyderabad
spaces
Noida, Mumbai,
Brookfield India Brookfield Asset
Office space Gurugram, 6.0%–7.0%
Real Estate Trust Mgmt
Kolkata
Approx.
Name Sponsor Focus Key Assets
Yield
India’s First Retail
Nexus Malls DLF Mall of India, Launching
REIT (Expected in Retail malls
(Blackstone) Nexus Select Soon
2025)
All REITs are listed on NSE & BSE and offer semi-annual dividend payouts.
Who Should Invest in REITs?
Retail investors seeking steady passive income
HNIs looking for diversification into real estate
Those who cannot afford to buy property but want real estate exposure
Long-term income-focused investors
SIP-based investors looking for REIT mutual funds or ETFs
REITs vs Direct Real Estate
Feature REITs Direct Real Estate
Minimum Investment ₹10,000–15,000 ₹25–50 lakhs+
Liquidity High (listed) Low
Diversification High (multiple assets) Low
Maintenance None High
Risk Lower (institutional assets) High (tenant risk)
Returns 6–8% annually Varies (often illiquid)
Summary Table
Parameter Details
Regulation SEBI (REIT Regulations, 2014)
Min Investment ₹10,000 (reduced from ₹50,000)
Yield (net) 6–7% typically
Distribution Minimum 90% of income
Structure Trust (Sponsor, Manager, Trustee)
Taxes Income taxed at unitholder level (except capital gains)
Listed Options Embassy REIT, Mindspace, Brookfield REIT
Final Thoughts
REITs offer an attractive hybrid of equity and fixed-income investments:
• Real asset backing
• Steady income flow
• Lower entry barrier
• Liquid and regulated
