What is a REIT?
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing commercial real estate — offices, retail malls, warehouses, or data centres. REITs pool money from investors and distribute at least 90% of their rental income as dividends to unitholders. They trade on stock exchanges like regular stocks.
REITs allow retail investors to earn regular rental income from commercial real estate — an asset class previously accessible only to institutions or ultra-high-net-worth individuals.
REITs Listed in India (as of 2026)
- Embassy Office Parks REIT: India's first REIT (2019). 45+ million sq ft of office space across Bengaluru, Mumbai, Pune, and NCR. Tenants include Microsoft, JPMorgan, Google.
- Mindspace Business Parks REIT: 32+ million sq ft office. Properties in Mumbai, Hyderabad, Pune, Chennai.
- Brookfield India REIT: 14+ million sq ft of Grade A offices in Mumbai, Gurugram, Noida, Kolkata.
- Nexus Select Trust REIT: India's first retail REIT (2023). 17 retail malls across 14 cities.
Minimum Investment in Indian REITs
SEBI reduced the minimum lot for REITs from 200 units to 1 unit in 2022, making REITs accessible to retail investors. At a unit price of ₹300–₹400 (typical range), you can invest for as little as ₹300–₹400 — equivalent to any other NSE/BSE listed stock.
How REITs Generate Returns
- Distributions (like dividends): Quarterly rental income distributions — typically 5–8% distribution yield on cost
- Capital appreciation: If property values and rentals grow over time, REIT unit prices appreciate
- Total return: Embassy REIT has delivered approximately 8–12% total return annually since listing (distributions + price appreciation)
REIT Distributions — Tax Treatment
REIT distributions have multiple components with different tax treatment:
- Interest income component: Taxed at slab rate
- Dividend component: Taxed at slab rate
- Repayment of SPV loan component: Tax-free
- Return of capital: Reduces cost basis, taxed on final sale
Overall, approximately 30–50% of REIT distributions are typically tax-free or tax-efficient, making the effective yield higher than stated.
InvIT — Infrastructure Investment Trust
InvITs are similar to REITs but invest in infrastructure assets: toll roads, power transmission lines, gas pipelines, renewable energy. Listed InvITs in India include IRB InvIT Fund, Powergrid InvIT, Indigrid, and National Highways Infra Trust. They offer higher yields (8–12%) but also higher risk than REITs.
REIT vs Real Estate Direct Investment
- Liquidity: REITs trade on exchange (sell in seconds); property takes months to sell
- Entry amount: REITs from ₹300; property requires ₹50 lakh+
- Maintenance: REITs are passive; property requires active management
- Returns: Grade A commercial REITs often outperform residential property on rental yield
- Diversification: One REIT gives exposure to 30–50 properties across cities