Indian Real Estate is witnessing a constant change, especially in the last few years. The introduction of various government schemes like Real Estate Regulatory Act (RERA), Pradhan Mantri Awas Yojna (PMAY), Goods and Services Act has given a boost to the sector and positively influenced the investments. While the growth is accompanied by uncertainties, the introduction of the new concept REITs in the industry is said to be the new driving force for the Indian real estate. It has navigated India into the pool of mature markets like developed nations and in process of curbing the liquidity crunch. This platform has opened gates for global investors and opened new avenues for domestic investors.
What are REITs and how do they function?
Real Estate Investment Trusts (REITs) are a popular form of investment instruments worldwide. However, India has recently formalized its guidelines. The REIT platform is approved by the Securities and Exchange Board of India (SEBI) and similar to Mutual funds.
It pools capital from investors to buy and manage real estate assets that can be traded on the major stock exchange. This has opened ways for small investors to put their money in high-value properties thus giving them access to real estate. Hence, it is an easy platform to generate funds from investors, infuse it into real estate and get returns. Since it is approved by SEBI and publicly traded, it has increased transparency in the real estate market.
While publically traded REITs sell shares to raise funds, private REITs need to find individual investors for their portfolios. REITs provide high dividend yields and income is generated from rent, leasing properties, and managing fees. It offers stable returns to investors for a longer duration. This is what makes REIT a safe asset class to invest in.
Advantages of REIT
REIT has become the talk of the real estate market and investors are eager to capitalize on it. It has become the easiest way to enter into real estate due to its enormous advantages:
Lucrative income– As per guidelines, REITs are required to distribute a minimum of 90% of its taxable income to investors, twice a year.
Low investment– It allows investors with low capital to enter into commercial real estate and invest in high-end properties that were earlier reserved for big investors.
Transparency– REIT is obligated to share detailed information with shareholders on the values of capital and income generated, thus, making the platform transparent. Investment in REIT is secured and less volatile as compared to other asset classes.
Diversified portfolio– REIT needs to invest in a minimum of 2 projects as per the guidelines. Hence, making the investment secured. Hence, investors do not have to rely on one segment and can balance their earnings from other variants.
REIT is perceived to be a boom for the Indian real estate, especially for commercial developers as it opens doors for viable funding options. The success of this investment instrument will be based on the benefits it provides to its investors. It is expected to contribute to the long term development of real estate further stimulating economic development.
House for sale in Mohali are amongst the top property for investment. Prices of the flats are increasing due to the fast-paced development of the area and the green quotient of the area. Investment in this region is fruitful from the rental income perspective as well. The flats are fully equipped and ready to move.