How REITs Work
A REIT raises money from investors through an IPO, uses the funds to buy large commercial properties (office parks, malls, warehouses), earns rental income from tenants (typically large corporations), and distributes 90% of that income to unitholders every 6 months. The units are listed on NSE/BSE — investors can buy and sell them like stocks.
| Listed REIT | Focus | IPO Year | Key Markets |
|---|---|---|---|
| Embassy Office Parks REIT | Office parks | 2019 | Bangalore, Pune, Mumbai, Noida |
| Mindspace Business Parks REIT | Office parks | 2020 | Mumbai, Hyderabad, Pune, Chennai |
| Brookfield India Real Estate Trust | Office parks | 2021 | Gurugram, Noida, Mumbai, Kolkata |
| Nexus Select Trust | Retail malls | 2023 | 17 cities — Pan India |
REIT vs Direct Property Investment
| Factor | REIT | Direct Property |
|---|---|---|
| Minimum investment | ₹250–₹500 (1 unit) | ₹20 lakh+ |
| Liquidity | High — sell units on exchange any time | Low — months to sell |
| Income | Regular distributions — 90% of cash flow | Rental income — tenant dependent |
| Management | Professional — no landlord hassles | Owner-managed or paid manager |
| Property type | Institutional-grade commercial only | Any — residential, commercial, land |
| Capital appreciation | Through unit price appreciation | Direct property value growth |
Related Terms
Frequently Asked Questions
A REIT (Real Estate Investment Trust) is a SEBI-regulated listed entity that owns income-generating commercial real estate. Retail investors can buy REIT units on NSE/BSE like stocks and earn regular income distributions — 90% of net distributable cash flow must be distributed every 6 months. India has 4 listed REITs: Embassy, Mindspace, Brookfield, and Nexus Select Trust.
You can buy REIT units on NSE or BSE through any stockbroker — the same process as buying shares. You need a demat account and trading account. REIT units are traded at prevailing market price — typically ₹250–₹500 per unit. You can start with as little as 1 unit. No physical visit, no property registration required.
Indian REITs have delivered distribution yields of approximately 5–8% per annum on invested capital. Additionally, unit prices have appreciated since listing for most REITs. Total returns (distribution + unit price appreciation) have been 8–15% annually for early investors. Past returns are not guaranteed — yields vary with occupancy, interest rates, and market sentiment.
REIT distributions have three components taxed differently: (1) Interest income — taxed as per your income slab, (2) Dividend income — taxed at 10% if annual dividends exceed ₹5,000, (3) Return of capital — not taxed but reduces your cost basis. Capital gains on selling REIT units are taxed at 10% LTCG (held >3 years) or slab rate STCG.
Yes. NRIs can invest in Indian REITs through NRE/NRO demat accounts on the same exchanges. REIT distributions are repatriable subject to applicable TDS deductions. REITs are an attractive alternative to direct property for NRIs — no property management hassle, high liquidity, and regular income. Check with your bank for NRI demat account requirements.