Owning property has always been the most popular investment option. But there's a limit to the extent of real estate a common man can own - a house, maybe two, a bit of land, a pair of shops.. seems exhaustive already! But these limits are a thing of the past now - because of REIT.
Congress established REITs in 1960 as an amendment to the Cigar excise Extension. the supply allows investors to buy shares in commercial real estate portfolios—something that was previously available only to wealthy individuals and through large financial intermediaries. Property during a REIT portfolio may include apartment complexes, data centers, healthcare facilities, hotels, infrastructure—in the shape of fiber cables, cell towers, and energy pipelines—office buildings, retail centers, self-storage, timberland, and warehouses.
In general, REITs concentrate on a specific real estate sector. However, diversified and specialty REITs may hold differing types of properties in their portfolios, like a REIT that consists of both office and retail properties.
Many REITs are publicly traded on major securities exchanges, and investors can purchase and sell them like stocks throughout the trading session. These REITs typically trade under substantial volume and are considered very liquid instruments
In layman's terms, REITs own real estate properties that are profitable- Prominent office spaces pulling in steady rent, Retail real estate, Healthcare, Industrial & Residential properties- and permit you to invest small amounts in them and become a fractional owner.
Sounds familiar? Yes! Put simply, it does resemble what mutual funds do, but in a different sector. Where mutual funds have equity stocks in their portfolio, REITs have land properties in their portfolio. REITs are comparatively new to the Indian market, but they're quickly gaining traction. Like mutual funds which facilitate your investing small amounts of money through them into otherwise expensive blue-chip stocks, REIT solved the complex problem of the overall masses being able to own high-value real estate properties, by now providing a medium for fractional ownership.
Mentioned below are some of the commonly available varieties of REITs in India:
This is all the basics of what is REIT - decoded for you. Hope this helps you understand that this new - and seemingly obscure concept - is really quite easy. However, there are still several technicalities - the taxation in REIT, the minimum investment in REIT, the main players in REIT & more that you would need to explore. All of those blogs will be uploaded soon. Stay tuned - we are visiting to simplify all of REIT for you!