How to Invest in SM REIT

If you’ve ever wanted to invest in real estate but felt priced out of the market, SM REITs might be the opportunity you’ve been waiting for. 

Introduced by SEBI, Small and Medium Real Estate Investment Trusts (SM REITs) allow everyday investors to participate in smaller income-generating properties valued between ₹50 crore and ₹500 crore. 

Unlike traditional REITs that focus on massive office parks and commercial hubs, SM REITs are designed to make real estate investing more affordable, transparent, and accessible to retail investors.

But how to invest in SM REITs in India?

Let’s get into the details to find the simplest way to let you begin your investment journey with ease. 

How to Invest in SM REITs in India?

SM REITs can be invested in easily, and with the following steps:

1. Open a Demat Account: Choose a SEBI-registered broking platform, e.g., Zerodha, Groww, or Upstox. Complete the online KYC by uploading documents like PAN card, Aadhaar card, and bank details.
2. Fund Your Account: Add the amount to be invested in your trading account via net banking or UPI.
3. Search for SM REIT Schemes: Check your brokerage account to see if SM REIT schemes are listed. For example, Property Share Investment Trust has the PropShare Platina scheme with Bengaluru commercial office buildings.
4. Place an Order: Choose the quantity of units you want to buy. SM REIT units are exchange-traded and can be bought and sold using a demat account, like equity shares.
5. Watch Over Your Investment: Keep track of your investment performance via your brokerage platform and stay informed with quarterly statements and distribution alerts from the SM REIT.

Benefits of Investing in SM REITs in India

Are you still confused about whether or not to invest in SM REITs in India?

Let’s make your decision simpler. Here are the top 5 benefits of investing in Small & Medium Real-Estate Investment Trust: 

1. Affordable Entry Point – Compared to traditional REITs and direct property purchases, SM REITs require a lower ticket size, making real estate investing more accessible to retail investors. 
2. Diversification – Offers exposure to income-generating properties without needing to buy an entire property, helping spread investment risk. 
3. Regular Income – Investors can earn periodic distributions (like rental income), creating a steady income stream. 
4. Transparency & Regulation – Being SEBI-regulated, SM REITs provide more transparency and investor protection compared to informal real estate deals. 
5. Liquidity Advantage – Unlike physical real estate, SM REITs (once listed) can be traded on stock exchanges, giving investors an easier exit option.

Risks of Investing in SM REITs in India

Well, even though it offers too many benefits, but at the end it is an investment product and one must not overlook the risk associated with the investment. 

Here are a few disadvantages of investing in the SM REITs: 

1. Market Risk – Returns depend on occupancy levels, rental yields, and overall real estate demand. Economic slowdowns may impact performance. 
2. Limited Track Record – Since SM REITs are a new category in India, there’s little historical data to assess long-term returns and stability. 
3. Regulatory Uncertainty – While SEBI has set guidelines, evolving regulations may impact the structure, taxation, or benefits in the future. 
4. Liquidity Concerns (Initially) – Until a strong secondary market develops, selling units quickly may be challenging. 
5. Lower Yields vs Direct Ownership – The returns might be lower than owning and leasing a property directly, as management fees and operational costs reduce payouts.

Conclusion

Investment in SM REITs in India provides an exceptional opportunity to invest in the real estate sector with relatively less capital investment than direct real estate investment. After performing the above steps, you can make your entry into SM REIT investments. 

Always do proper research and consult the opinion of a financial advisor to find out if SM REITs are appropriate for your investment needs and risk profile!

Frequently Asked Questions

Q1: Are SM REITs investable through mutual funds?

SM REITs are not presently available for investing in through mutual funds. You can invest directly in SM REIT schemes by buying units using a demat account.

Q2: Is there any tax implication in investing in SM REITs?

The revenue accrued by SM REITs will be taxed under the prevailing tax laws of India. It is advisable to consult a tax consultant about the specific tax impact based on your unique position.

Q3: How often do SM REITs distribute income?

SM REITs are required to distribute not less than 95% of net distributable cash flows to the unitholders. Distribution frequency, however, can be flexible, so do check the distribution policy of the respective scheme.