Actual property has lengthy been a favoured asset for Indian buyers, however proudly owning industrial property comes with excessive entry boundaries. Giant upfront capital, long-tenure loans, tenant administration, upkeep hassles and illiquidity make direct possession cumbersome.
Pratik Dantara, EPC member of the Indian REITs Affiliation and chief investor relations officer and head of technique at Nexus Choose Belief, weighed in on whether or not Reits (Actual Property Funding Trusts) are the precise different for accessing such premium property on the Mint Cash Competition 2026.
The analogy Dantara drew was that of mutual funds. “You make investments small quantities, personal income-generating properties throughout the nation, earn rental earnings, and purchase or promote models like fairness.”
A Reit invests in rent-yielding industrial property akin to workplace parks and malls. It’s required to distribute 90% of its money flows, usually on a quarterly foundation. The buildings are regulated by the Securities and Change Board of India (Sebi and professionally managed, eradicating operational hassles for buyers. In India, the primary Reit listed in 2019, and there are at the moment 5 listed Reits.
For buyers, Reits promise to operate as a hybrid between fairness and stuck earnings. They provide comparatively predictable money flows by means of rental earnings, together with the potential for capital appreciation as property values rise and rents develop. As a result of they’re listed, models could be purchased and offered on exchanges, providing liquidity that bodily actual property doesn’t.
They’ll additionally function a diversification instrument. Industrial actual property cycles don’t all the time transfer in tandem with fairness markets, making Reits a possible stabiliser inside a broader portfolio.
Returns, dangers and what to trace
On returns, Dantara stated Reits have delivered a balanced combine of normal earnings and capital appreciation, with common returns of about 17% over the previous 5 years.
Dangers in Reit investments are linked to actual property cycles. For example, throughout occasions akin to covid-19, rental waivers can have an effect on distributions. Rate of interest cycles additionally affect borrowing prices and acquisition spreads.
For retail buyers evaluating Reits, Dantara advised specializing in distribution yields, asset valuations printed each six months by unbiased valuers and loan-to-value ratios. Sebi doesn’t permit a Reit to borrow greater than 49% of the worth of its complete property.
“Most Indian Reits at the moment borrow solely about 28-30%, which signifies that they’ve comparatively reasonable debt ranges and decrease monetary threat,” Dantara stated.
The thought is that buyers who work in premium workplace parks or store in massive malls can now personal a share of those self same properties by means of Reits, with out committing large capital.
