SHOULD YOU INVEST IN REITS?
Investors India|August 2021
A new development has occurred that is likely to draw more retail investors towards Real Estate Investment trusts (REIT). The Securities and Exchange Board of India (Sebi) has amended its regulations for REITs. Henceforth, investors will be able to apply for the IPO (initial public offer) of a REIT with as small an amount as Rs. 10,000-15,000. And they will be able to buy and sell just one unit of these instruments in the secondary market. Earlier, the minimum investment requirement was much higher and hence beyond the reach of many retail investors.
SHOULD YOU INVEST IN REITS?

Why should you consider investing in REITs? The first reason is that they will allow you to diversify your portfolio beyond equities, fixed income, and gold. REITs invest in grade A commercial property. Investing directly in such properties is beyond the financial capability of many retail investors.

This is an asset class that is especially favoured by investors who desire a regular income, say, affluent retirees. REIT regulations make it mandatory for these investment vehicles to distribute 90 per cent of their cash flows to investors semi-annually.

The regulations have been framed in such a manner that REITs can’t invest in under-construction properties, which carry development risk. 80 per cent of their assets must be invested in completed properties.

This story is from the August 2021 edition of Investors India.

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This story is from the August 2021 edition of Investors India.

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