REITs: A Beginner’s Guide to Real Estate Investment Trust

Imagine you’re investing in iconic Skyscrapers, Shopping Malls, and Luxury Hotels without millions or the need for a Property Management team. Isn’t it cool?

Yes it is possible, through the extraordinary accessibility, liquidity, and attractive returns of Real Estate Investment Trusts (REITs). 

Let’s take a closer look at how REITs can enhance your portfolio and bring real estate benefits within your reach. 

What are Real Estate Investment Trust (REITs) ?

Real Estate Investment Trusts (REITs) in India allow individuals to invest in income-generating real estate without direct ownership. Introduced by SEBI in 2007 and updated in 2014, REITs enable investment in properties like malls, apartments and data centers.

What are Real Estate Investment Trust (REITs)

Types of Real Estate Investment Trust (REITs)

  • Equity REITs: Equity REITs own and manage income-producing real estate. Revenue comes from leasing space and collecting rents on the properties, which are then distributed as dividends to shareholders.
  • Mortgage REITs (mREITs): Mortgage REITs lend money to real estate owners and operators or acquire mortgage-backed securities. Their earnings come from the interest on these financial assets. Interest rate fluctuation makes mREITs risky. Rising interest rates can reduce profits.
  • Hybrid REITs: These REITs combine the investment strategies of both equity REITs and mortgage REITs. Hybrid REITs generate rental and interest income both.
REITs - A Hybrid Product between Equity & Fixed Income

REITs generate income in two ways,

I) Regular Income through Dividend/Interest and

II) Income through Capital Gain

MSM REITs: Micro, Small, and Medium REITs

In 2023, India introduced MSM REITs, enabling small retail investors to enter the market with lower investment amounts. Launched by SEBI, these REITs require a minimum asset size of INR 25 crores, much lower than the INR 500 crore needed for traditional REITs. 

This change increases competition, reduces costs, and allows more investors to participate in real estate, boosting liquidity in the sector and its related industries.

What Assets can A REIT own ?

Key Stakeholders and Structure of REITs in India

The Real Estate Investment Trust (REIT) in India operates under the Indian Trusts Act (1982) and is regulated by SEBI. Investments can be made directly, through Special Purpose Vehicles (SPVs), or via SPVs invested in other SPVs holding real estate assets. Key stakeholders in REITs include:
  • Sponsor: Sets up the REIT and appoints the trustee.
  • Trustee: Manages the assets on behalf of investors.
  • Manager: Handles the REIT’s operations.
  • Valuer: Ensures transparent financial and technical asset valuation.
Structure Of REIT

How to Invest in Real Estate Investment Trusts?

  • SEBI mandates REITs to be listed on stock exchanges and raise funds through an Initial Public Offering (IPO). 
  • An individual may buy shares in a REIT, which is listed on major stock exchanges, just like any other public stock. Investors may also purchase shares in a REIT mutual fund or exchange-traded fund (ETF).

Who can Invest in REITs?

  • Any investor (Domestic / Foreign / Retail / Institutional) can buy REIT units in India; 
  • The minimum subscription amount is in the range of ₹10,000 to ₹ 15,000/- and the trading lot is 1 unit. (revised w.e.f. July 30, 2021) Previously it was ₹50,000 & 100 units, respectively;  
  • Investors can purchase REIT units through a Demat account, similar to how they would purchase equity shares;  
  • REITs are suitable for those who want to take price benefits / returns from Real Estate.

Advantages of Investing in REITs

  • Liquidity: REITs are typically traded on major stock exchanges, making them easy to buy and sell.
  • Diversification: REITs provide access to the real estate market, which can diversify an investment portfolio.
  • Regular Income: REITs pay out most of their income as dividends, ensuring consistent income for investors.
  • Professional Management: REITs are managed by experienced professionals who handle the complexities of property management and real estate transactions.

How to own units of REITs?

Investors can own units of REITs in following manner: 

  • By subscribing to issue in Initial Public Issue (IPO) or Followon Issue of a REITs, 
  • By purchasing units of REITs from Stock Exchange, where they are listed,
  • Procedures for the bidding, application, payment, and Allotment of REITs Units in Public Issue (IPO or Follow-on Issue)
  • Price of Units shall be determined through Book building process,
  • Investors are required to participate in the Issue only through the ASBA process.

List of REITs in India

List of REITs in India

New REITs: 360 ONE Real Estate Investment Trust (REIT), registered with SEBI on April 12, 2024 (IN/REIT/22-23/0005), has perpetual validity, making it a long-term investment vehicle for real estate assets in India.


REITs can be a valuable addition to an investment portfolio, offering regular income, diversification, and exposure to the real estate market without the need for direct property ownership. However, like all investments, they come with risks that need to be carefully considered.


As the name suggests, this rule requires real estate trusts to distribute 90% of their taxable income to current shareholders.

Investing in REITs diversifies your portfolio beyond traditional stocks and bonds, offering strong dividends and potential for long-term capital appreciation.

A REIT investment is open-ended and can last indefinitely until the shareholder chooses to sell their shares.

Investing in REITs for the long term is beneficial, providing stable dividends and capital appreciation without property management hassle.

Arunava Chatterjee
Founder of INVESMATE. I am a Certified Research Analyst, Value & Growth Investor, Trainer and Tech Entrepreneur. With 15 years of capital market experience, I have trained 10000+ students on INVESMATE. I have created several YouTube videos, mostly related to in-depth fundamental analysis.


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