Want a slice of the real estate market without buying a house or land?You don’t necessarily need to own a property to invest in real estate, REITs can be another route that lets investors put their money into income-generating properties.Real estate investment trusts (REITs) offer investors a way to invest in such properties and earn income from them. And this investment route is gaining ground in India, with the country’s REIT market now ranking as the fourth-largest in Asia by value.India’s REIT market has grown 62% to $17.7 billion, moving ahead of Hong Kong. According to a Cushman & Wakefield report, the market was valued at $11 billion at the end of 2024.
So, what exactly are REITs?
A REIT is a company that owns and operates real estate to generate income. It manages portfolios of high-value properties and mortgages, leases properties and collects rent, which is then distributed among shareholders as income and dividends.REITs can allow both big and small investors to put money into large commercial real estate projects. Properties held by REITs can include data centres, infrastructure, healthcare units and apartment complexes.REITs can broadly be classified based on the type of business they undertake and how their shares are bought and sold. Equity REITs generally operate and manage income-generating commercial properties, with rent being a key source of income. Mortgage REITs, or mREITs, lend money to property owners or acquire mortgage-backed securities and earn interest.Then there are also hybrid REITs, which combine equity and mortgage REITs. Private REITs function as private placements for a selective group of investors, while publicly traded REITs have shares listed on the National Securities Exchange and are regulated by SEBI. Public non-traded REITs are registered with SEBI but are not traded on the National Stock Exchange.
Why should you invest in REITs?
For investors, REITs can provide exposure to a mix of properties without having to manage the underlying real estate themselves. They can also offer an avenue for income, with REITs required to distribute as much as 90% of their taxable earnings to shareholders.REITs can also form part of a long-term or retirement portfolio, offering exposure to real estate as an asset class. Their income-generating potential and connection with the real estate market can make them relevant for investors looking at longer investment horizons.Investors can buy shares in publicly listed REITs through major stock exchanges. REITs are similar to mutual funds in that they pool investments, although REITs hold real estate rather than bonds or stocks. Investors can also seek assistance from financial advisers when choosing a REIT.
How can you invet in REITs?
- Buy REIT units through stocks
Investors can purchase REIT units directly, much like buying shares of publicly listed companies on major stock exchanges.
- Invest through mutual funds
Investors can choose mutual funds that pool money into REIT-linked funds managed by asset management companies, offering diversification.Exchange-traded funds (ETFs) provide an indirect way to invest in REITs while also offering portfolio diversification.Expansion in the REIT market has been driven in part by the growth of listed real estate portfolios and new listings, which have added millions of square feet of office space.India’s REIT market comprised seven REITs, including two small and medium REITs (SM REITs). Six of these together held around 178 million sq ft of listed portfolio space as of June 2026, while another 36.7 million sq ft was under construction or planned.Two recent listings have contributed substantially to the increase. Knowledge Realty Trust and Bagmane Prime Office REIT added a combined 53.7 million sq ft. Together, they accounted for around three-fourths of the total new space added to the six India REITs between June 2025 and June 2026.“India’s REIT market has reached an important inflection point, with larger listed portfolios, strong occupancies and a healthy development pipeline reinforcing its institutional depth,” Somy Thomas, executive managing director, Capital Markets, India, at Cushman & Wakefield, said.The office market has remained an important support for REITs, with occupancy staying high even as Grade A vacancy tightened. Demand from multinational occupiers and the continued expansion of Global Capability Centres (GCCs) have also supported the market.
