In the past couple of years, Real Estate in India has seen sea changes. Regulations and laws are now in place that allow more control over the real estate sector while giving more powers and benefits to the consumers.
After RERA, the Real Estate (Regulation and Development) Act, 2016, the next most important change has been the introduction of the REIT, the Real Estate Investment Trust, where investors can invest with a small sum of INR 200,000 in the Indian real estate market.
REIT is approved by Securities and Exchange Board of India (SEBI). Its function is to pool money from different investors across the country with the ultimate aim of getting funds to invest in commercial properties to generate income.
As an investor, especially an NRI investor, REIT is a good alternative investment channel by which you can invest in Real Estate indirectly like you invest in shares indirectly via Mutual Funds. Here are few reasons why investing in REIT might be good for you.
A. Gains via Dividends: About 90 percent of dividends are offered to investors. You are free to decide its use. If you want to invest again, then you need to purchase more shares.
B. Returns through Appreciation: As a trend, REITs have been reported to perform well in long-term appreciation of commercial real estate (CRE). A good example of REIT investment would be Panchshil’s high-performing CRE portfolio of IT parks, built-to-suit office spaces, special economic zones (SEZ), that caters to Fortune 500 companies.
C. Low Risk: With REIT, 80% of assets will need to be invested into revenue-generating and completed projects. Balance 20% includes construction projects, equity shared of listed properties, mortgage-based securities driving 75% of income from government securities.
D. Hassle-free property management: The best thing about REITs is it allows the investor to own CRE while enjoying the benefits of having property managers guide you on making money from trust member.
Read more about the various benefits of REIT here: https://www.zricks.com/Updates/The-Role-of-REIT-in-Indian-Real-Estate-Market/2270