What is REIT - Real Estate Investment Trusts

What is REIT - Real Estate Investment Trusts Tips And Tricks

Owning real estate has always been the most popular investment option. But there is a limit to the extent of real estate a common man can own - a house, maybe two, piece of land, a couple shops..seems exhaustive already! But these limits are a thing of the past now - thanks to REIT.

REIT stands for Real Estate Investment Trusts. 

✓ These are companies that own or finance  income-producing real estate belonging to a wide variety of property sectors. 

✓ They are majorly real estate companies that have to meet a number of requirements to qualify as REITs.

✓ REITs must invest 80% of their assets in established and income-generating assets, according to SEBI regulations, REITs can currently only invest in commercial real estate and office premises. 

✓Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.

In layman terms, REITs own real estate properties which are profitable- Prominent office spaces pulling in steady rent, Retail real estate, Healthcare, Industrial & Residential properties- and allow you to invest small amounts in them and become a fractional owner. 

Sounds familiar? Yes! Put simply, it does resemble what mutual funds do, but in a different sector. Where mutual funds have equity stocks in their portfolio, REITs have Real Estate properties as their portfolio. REITs are comparatively new to the Indian market, but they are quickly gaining traction. Like mutual funds which help you invest small amounts of money through them into otherwise expensive blue-chip stocks, REIT solved the complex problem of the general masses being able to own high-value real estate properties, by now providing a medium for fractional ownership.

This is all the basics of what is REIT - decoded for you. Hope this helps you understand that this new - and seemingly obscure concept - is actually quite easy. However, there are still several technicalities - the taxation in REIT, the minimum investment in REIT, the major players in REIT & more that you would need to explore. All of these blogs will be uploaded soon. Stay tuned - we are going to simplify all of REIT for you!  


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