Invest in Malls and Offices with Just ₹500: The REIT Revolution in India
REITs, or Real Estate Investment Trusts, offer retail investors a way to earn rental income and benefit from property appreciation without the usual hassles of owning physical real estate.
ReitsReal EstateInvestmentTax BenefitsLiquidityReal Estate NewsSep 30, 2025
Speaking at the Mint Money Festival, Dantara highlighted the tax benefits and the potential of this relatively young but thriving asset class. REITs pool money from investors to own and operate income-generating properties, Dantara explained. The income generated is distributed among investors. Most REITs do not own properties directly but hold stakes in special purpose vehicles (SPVs), which in turn hold the assets.
REITs operate under a structure tightly regulated by the Securities and Exchange Board of India (Sebi). They generate rental income shared with unitholders as dividends, and investors also benefit when the underlying properties appreciate in value. “REITs are mandated to distribute 90% of profits to unitholders every six months; 80% of assets must be rent-generating and leverage cannot exceed 49%. This ensures robust corporate governance,” said Dantara.
Returns so far have been encouraging. “Historically, Indian REITs have delivered total returns of about 15% annually—6.5% from dividends and the rest from capital appreciation,” he noted. Affordability and liquidity are other strong advantages. Unlike physical real estate, which requires a large capital outlay and ties investors to a single location, REITs allow entry from as low as ₹500 through stock exchanges. Investors also gain exposure to professionally managed portfolios across multiple cities without the hassles of tenant management, maintenance, or vacancies. Since units are exchange-traded, liquidity is far better than traditional real estate, where exits can take months.
Tax treatment also adds to their appeal. Dividends are tax-free in the hands of investors if SPVs continue under the old tax regime; otherwise, they are taxed at slab rates. Interest income is taxable at slab rates. Capital gains on the sale of REITs units are treated like equities—long-term gains at 12.5% and short-term at 20%.
India introduced REITs in 2014, though the first listing, Embassy Office Parks REIT, came only in 2019. With the listing of Knowledge Realty Trust in August 2025, there are now five REITs. The others include Mindspace Business Parks, Brookfield India, and Nexus Select Trust (retail-focused). “Together, they manage assets worth ₹2.25 trillion, have a market capitalization of about ₹1.5 trillion, and count nearly three lakh retail unitholders today—up from just 6,000 in 2019,” said Dantara.
Globally, REITs are far more entrenched. In the US, nearly 98% of commercial real estate is structured as REITs, compared with just 12% in India. “This gap shows the headroom for growth here,” Dantara added.
With India’s real estate sector expanding and REITs recently classified as equity for index inclusion, participation is expected to rise. New REITs are also likely to emerge in sectors such as healthcare, logistics, industrials, and data centres. Analysts see a 6x growth opportunity in retail REITs and 2.5x in office REITs.
For retail investors, REITs combine the growth potential of real estate with liquidity, diversification, tax efficiency, and professional management—offering the benefits of property ownership without the traditional hassles.
Frequently Asked Questions
What are REITs?
REITs, or Real Estate Investment Trusts, are investment vehicles that pool money from investors to own and operate income-generating properties. They distribute the income generated to investors as dividends.
What are the tax benefits of investing in REITs?
Dividends from REITs are tax-free in the hands of investors if the SPVs continue under the old tax regime; otherwise, they are taxed at slab rates. Interest income is taxable at slab rates, and capital gains are treated like equities.
How much does it cost to invest in REITs?
REITs allow entry from as low as ₹500 through stock exchanges, making them an affordable investment option compared to physical real estate.
What are the risks associated with REITs?
Like any investment, REITs come with risks such as market volatility, changes in interest rates, and economic downturns that can affect the performance of the underlying properties.
What is the future potential of REITs in India?
India’s real estate sector is expanding, and REITs are expected to grow significantly. Analysts predict a 6x growth opportunity in retail REITs and 2.5x in office REITs.
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