What's A REIT?REIT, short for a real estate investment trust is an entity that owns, operates or finances income-producing real estate.
REITs provide an investment opportunity, like a mutual fund, that makes it possible for anyone who can invest INR 15 to 20 thousand, to benefit from valuable real estate by owning a fraction of it.
More Yields Than You Imagined
📌 Since their recent Indian debut, REITs have emerged as top investment alternatives, outperforming the BSE Sensex, the Realty Index, and a majority of small, mid and large-cap mutual funds.
Also, REITs seem to be running on stabilisers because despite the pandemic, neither the Embassy Office Parks REIT nor the Mindspace Business Parks REIT ever traded below their issue price.
Even the Brookfield India REIT has recovered exceptionally well in the last six months, per
this report.
2022 Outlook
REITs are primarily powered by high rent yielding office buildings and India has approximately 310-320 million sq. ft. of REIT-worthy office space. Of this, around 87 million sq. ft. is owned by REITs today.
As the commercial office market bounces back, new office buildings will be added to REITs, while newer REITs shall be formed to service increasing high-grade office supply across top cities.
📎 In 2021, Blackstone and Brookfield have added about 30 million sq. ft. through acquisition of select portfolios from Prestige and RMZ, respectively.
In One Sip
It's true that REITs offer post-tax returns twice as much as fixed deposits, recurring deposits, government bonds and other classes, but no two REITs are made alike. If investing, put your money in a high-quality REIT managed by a reputed brand, say experts.
