A Real Estate Investment Trust (REIT) is a SEBI-regulated trust that owns income-producing real estate and pays investors regular cash distributions. In India, REITs must invest mostly in completed, rent-generating properties and distribute at least 90% of their net distributable cash flows (NDCF) to unitholders. You can buy REIT units on NSE/BSE like a stock. (Securities and Exchange Board of India, DMD Advocates)
What is a REIT?
A REIT pools investor money to buy and manage commercial real estate—typically Grade-A offices and retail malls—and pays out rental income after expenses. In India, SEBI’s framework requires ≥80% of assets to be in completed, income-generating properties; the balance (≤20%) can be in permitted investments such as under-construction assets or specified debt/securities. (Securities and Exchange Board of India, Lexology)
Why REITs matter for Indian investors
- Access institutional-quality real estate with small tickets.
- Transparent rules on cash flow distributions (≥90% of NDCF).
- Listed on stock exchanges for daily liquidity and price discovery. (DMD Advocates)
How REITs Generate Returns
- Cash distributions (primarily rent passed through via SPVs).
- Capital appreciation of the REIT unit price.
- Occasional special distributions based on asset sales/refinancing.
Distribution yield (simple):
Distribution Yield=Cash distributed in last 12 monthsCurrent unit price\text{Distribution Yield}=\frac{\text{Cash distributed in last 12 months}}{\text{Current unit price}}
Operating quality metrics to track
- Occupancy (%), WALE (weighted average lease expiry), tenant mix, like-to-like rent growth.
- Leverage (regulatory cap typically 49%; higher leverage may be allowed subject to conditions/approvals). (INDIAN REITs ASSOCIATION (IRA))
Indian REIT Landscape (List & Themes)
As of 2025, India has four listed REITs spanning offices and retail:
- Embassy Office Parks REIT – Offices (multi-city)
- Mindspace Business Parks REIT – Offices (Mumbai, Pune, Hyderabad, etc.)
- Brookfield India Real Estate Trust (BIRET) – Offices/office-anchored mixed-use; active on acquisitions. (Reuters)
- Nexus Select Trust – Retail malls across major cities.
(You can verify each on NSE’s quote pages—for example, BIRET is listed on NSE.) (NSE India)
What’s new in 2025? SEBI has continued to streamline disclosures and reduce entry size to deepen participation. Small & Medium REITs (SM-REITs) also broaden access; SM-REIT schemes must invest a very high share in completed, rent-generating assets. (The Times of India, Khaitan & Co)
How to Invest in a REIT (Step-by-Step)
Route 1: Buy on exchange (secondary market)
- Open a demat + trading account with any broker.
- Search the REIT ticker (e.g., BIRET/NSE).
- Place a market lot = 1 unit order; trade and settle like equities. (Lot size was reduced to 1 unit; earlier rules required bigger lots.) (mint)
Route 2: Apply during IPO/FPO
- Minimum application amounts for public issues have been reduced (₹10,000–₹15,000) to improve retail access; check the offer document for exact terms. (mint)
Where to hold & track
- Units are in your demat; track distributions and announcements via the REIT’s investor relations page and the exchange. (NSE India)
Regulations & Safeguards You Should Know
- Asset mix: ≥80% in completed, income-generating assets; ≤20% in permitted investments. (Securities and Exchange Board of India)
- Cash flow distribution: REITs must distribute ≥90% of NDCF at the trust and SPV levels, as standardized by SEBI (Dec 2023 circulars). (DMD Advocates)
- Leverage: Indian REITs commonly reference a 49% borrowing cap (beyond which enhanced conditions/approvals kick in). (INDIAN REITs ASSOCIATION (IRA))
- Valuations & disclosure: Periodic valuations and detailed quarterly disclosures are mandated; SEBI continued aligning disclosure frameworks in 2025. (The Times of India)
Taxation of REITs for Investors (FY 2024-25 onward)
A. Tax on distributions you receive
A REIT’s payout is a mix of interest, rental, dividend, and ‘return of capital’ (loan repayment). Post Finance Act 2023, the loan-repayment/return-of-capital component is taxable in investors’ hands (generally as “income from other sources”). Dividend may be taxable depending on whether the SPV has opted for the concessional corporate tax regime; interest/rental are taxable at slab rates. Check each REIT’s payout break-up. (PrimeInvestor, Nishith Desai Associates)
B. Tax on selling REIT units (capital gains)
Budget 2024 rationalised capital gains from 23 July 2024:
- STCG (holding ≤12 months): 20% (was 15% earlier for transfers before 23 Jul 2024).
- LTCG (holding >12 months): 12.5%, with the annual exemption now ₹1.25 lakh for specified assets.
(Equity-like listed units such as REITs were part of this rationalisation.) (Outlook Business, DBS Bank, The Times of India)
Illustration: You bought 500 units at ₹300 and sold after 14 months at ₹345.
Gain = ₹22,500. Since holding >12 months, LTCG @12.5% applies after the aggregate ₹1.25 lakh annual exemption across eligible assets.
Always consult your tax advisor; rules can vary by your status (resident/NRI), the REIT’s payout mix, and future Budgets.
Who Should Consider REITs?
- Income seekers wanting relatively predictable cash flows from leased Grade-A assets.
- Asset allocators adding low-correlation real estate to a portfolio without locking large capital.
- HNIs/Family offices seeking exposure to institutional real estate with professional management and governance.
Be aware of risks:
- Tenant/sector concentration (e.g., large exposure to tech or retail).
- Interest-rate sensitivity (affects borrowing cost and valuations).
- Leasing cycle risks (renewals, WALE cliffs).
- Structural/tax changes (e.g., 2023 distribution tax change; 2024 capital-gains overhaul). (PrimeInvestor, The Times of India)
Due-Diligence Checklist (before you buy)
- Occupancy & WALE: Prefer high occupancy with staggered expiries.
- Lease terms: Mark-to-market potential, escalation clauses, and re-leasing spreads.
- Balance sheet: Net debt/asset value; headroom vs. leverage thresholds. (INDIAN REITs ASSOCIATION (IRA))
- NDCF payout discipline: Track historical payout % and cadence (quarterly/half-yearly). (DMD Advocates)
- Pipeline & capex: Visible growth (acquisitions/developments) without over-leveraging. (Reuters)
- Disclosure quality: Timely, granular reporting and independent valuations. (The Times of India)
REITs vs. Buying Property vs. Real-Estate Funds (Snapshot)
| Feature | REIT | Direct Property | Real-Estate MF/AIF |
|---|---|---|---|
| Ticket size | 1 unit (small) | High (₹₹₹) | ₹₹ (varies) |
| Liquidity | Daily on NSE/BSE | Low | Periodic |
| Diversification | Portfolio of assets | Single asset risk | Portfolio |
| Income | Regular distributions | Rent (DIY mgmt) | Depends on scheme |
| Transparency | High (SEBI rules) | Low/medium | High (fund norms) |
Practical FAQs
Q1. What’s the minimum I can invest?
As little as one unit on the exchange; public issues have low application amounts (₹10k–₹15k). (mint)
Q2. How often do REITs pay?
At least 90% of NDCF must be distributed; frequency is set by each REIT (commonly quarterly). (DMD Advocates)
Q3. Are returns guaranteed?
No. Distributions depend on property cash flows, occupancy, interest costs, and policy changes.
Q4. Can NRIs invest?
Yes—REIT units are listed securities; NRIs can invest subject to standard FEMA/SEBI rules (check broker and scheme documents).
Q5. What’s SM-REIT?
A newer, SEBI-notified category designed for smaller portfolios with tighter rules (e.g., very high allocation to completed, rent-generating properties). (Khaitan & Co)
Bottom Line
Indian REITs offer a clean, regulated, and liquid route to institutional real estate—without the headaches of owning property directly. If you need income plus moderate growth, REITs can complement equity/debt holdings in a core-satellite portfolio. Focus on quality (WALE, tenants), balance-sheet discipline, and payout consistency, and keep an eye on evolving tax rules and SEBI updates. (The Times of India)
Related reads on Endovia Wealth
- Pros & Cons of Commercial Property Investment
- Should You Buy or Rent Property?
- How to Evaluate a Real Estate Project
- SIP vs Lump Sum: What Works When?
Sources & references: SEBI REIT Regulations; SEBI circulars on NDCF; Livemint/ET coverage of minimum lot & application size; Indian REITs Association; Outlook/DBS on Budget-2024 capital gains; Reuters on Brookfield acquisition; NSE listings. (Securities and Exchange Board of India, DMD Advocates, mint, INDIAN REITs ASSOCIATION (IRA), Outlook Business, DBS Bank, The Times of India, Reuters, NSE India)