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How REITs Work In India?
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Ever wondered how you could own a slice of a premium office building in Mumbai or a buzzing shopping mall in Bengaluru, without actually buying the property? That’s exactly what Real Estate Investment Trusts (REITs) make possible. Let’s get into the details of how REITs work in India and how it can become one of your investment options.
How REITs Operate in India?
In India, REITs pool money from investors like you and me to purchase and manage income-generating real estate.
The best part?
You get a share of the rental income and potential appreciation, minus the hassles of property maintenance or huge capital requirements.
Now are they safe?
Yes, it is as REITs in India operate under the regulatory framework established by the Securities and Exchange Board of India (SEBI).
They must adhere to specific guidelines to qualify as REITs:
- Asset Composition: At least 80% of a REIT’s assets must be invested in income-generating real estate.
- Income Generation: A minimum of 75% of the REIT’s income should come from rents or mortgage interest.
- Dividend Distribution: REITs are required to distribute at least 90% of their taxable income to shareholders as dividends.
- Listing Requirement: REITs must be listed on stock exchanges like the NSE or BSE to provide liquidity to investors.
These regulations ensure transparency, governance, and investor protection within the Indian REIT market.
How Do REITs Generate Income?
REITs earn revenue mainly through rent from leased properties and capital appreciation. Some key sources of income include:
- Rental Income: Office spaces, retail malls, and industrial properties leased to tenants provide steady monthly or quarterly rent.
- Property Appreciation: REITs may sell properties at higher valuations to realize capital gains.
- Other Investments: Some REITs invest in real estate-linked securities and earn interest or dividend income.
Are REITs Profitable?
REITs in India have shown steady growth and profitability, especially for long-term investors. For example:
- Q1 FY26: Brookfield India, Embassy Office Parks, Mind space Business Parks, and Nexus Select Trust distributed a total of ₹1,559 crore to over 2.7 lakh unitholders, a 13% YoY increase.
- Dividend Yield: Top REITs in India offer annual dividend yields of 4–6%, making them suitable for income-focused investors.
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While REITs are generally safer than direct real estate investments, there are some risks associated with them:
| Risk Associated with REITs | Change in OI With Respect to Premium |
| Risk Type | Explanation |
| Market Risk | Unit prices fluctuate in response to trends in the stock market and real estate sector. |
| Interest Rate Risk | Rising rates can reduce borrowing capacity and REIT valuations. |
| Tenant Risk | Delays or defaults in rental payments affect income. |
| Liquidity Risk | Large sell-offs may impact REIT prices even though they are listed. |
| Regulatory Risk | Changes in SEBI guidelines or real estate laws can affect operations. |
Tip: Diversify across multiple REITs and asset types to reduce exposure.
Do REITs Pay Dividends?
One of the biggest attractions of REITs is the steady income they generate for investors.
By regulation, REITs in India must distribute at least 90% of their taxable income as dividends.
This income primarily comes from rentals earned on properties like office towers, malls, or warehouses owned by the REIT.
Think of it this way: if a REIT earns ₹100 crore in taxable income, it’s required to pass on at least ₹90 crore to its investors.
That means as a unitholder, you get your share of the rental income, without worrying about tenants, leases, or property upkeep.
The payout frequency can vary. Some REITs reward investors quarterly, while others may do so semi-annually or annually.
In India, these dividends are taxed in the hands of the investor, based on their income tax slab. Since the abolition of Dividend Distribution Tax (DDT) in 2020, the responsibility for tax payment shifted from the REIT to the investor.
How to Invest in REITs in India?
Investing in REITs in India is straightforward. Here’s how:
- Open a Demat and Trading Account: Choose a SEBI-registered broker like Zerodha, Groww, or ICICI Direct.
- Fund Your Account: Transfer the desired investment amount using net banking or UPI.
- Browse Available REITs: Explore listed REITs such as Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust, and Nexus Select Trust.
- Place an Order: Select the REIT units you wish to purchase and place an order through your trading platform.
The minimum investment amount typically ranges between ₹10,000 and ₹15,000, making REITs accessible to a broad spectrum of investors.
Top REITs Stocks in India
As of September 2025, the leading publicly listed REITs in India include:
- Embassy Office Parks REIT: India’s first publicly listed REIT, focusing on premium office spaces across major cities.
- Mindspace Business Parks REIT: Specializes in Grade-A office spaces in key metropolitan areas.
- Brookfield India Real Estate Trust: Manages a diversified portfolio of commercial office spaces.
- Nexus Select Trust: India’s first retail-focused REIT, owning and operating high-quality malls and retail spaces.
These REITs offer investors exposure to different segments of the real estate market, including office and retail properties.
Conclusion
REITs in India offer a unique opportunity for investors to gain exposure to the real estate sector without the complexities of direct property ownership.
By understanding how REITs operate, how to invest in them, the top REIT stocks available, and how they pay dividends, investors can make informed decisions that align with their financial goals.
FAQs
Q1: What are the tax implications of investing in REITs in India?
Dividend income from REITs is taxed according to the investor’s income tax slab. There is no Dividend Distribution Tax (DDT) applicable to REITs.
Q2: Can NRIs invest in REITs in India?
Yes, Non-Resident Indians (NRIs) can invest in REITs in India. They need to open a demat and trading account with a SEBI-registered broker and comply with the Reserve Bank of India’s (RBI) guidelines for foreign investments.
Q3: How do I evaluate the performance of REITs
Key factors to consider include the REITs occupancy rate, tenant quality, dividend yield, and the financial health of the underlying properties. Additionally, assess the REIT’s management team and their track record in property acquisition and management.