What Is a Real Estate Investment Trust (REIT)?

Investing in assets like gold, silver, properties, and other things has been around for years. But with time, people are looking for tax-saving investment options that are simple and safer to manage. This has given rise to options like mutual funds, digital gold, and so on. Among all these, there is an option that really stands out. This is the Real Estate Investment Trust (REIT). 

A Real Estate Investment Trust (REIT) allows individuals to invest in large-scale and income-generating real estate. All this can be done without actually buying or managing properties. But that is not it. It is an option that allows you to gain returns as well, which makes this really a better choice. 

So, read this guide to know all the details you need. Understand what is REIT. Explore the list of the top Real Estate Investment Trust companies and understand how you can invest in the same. So, let us get started. 

What Is a Real Estate Investment Trust (REIT)?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate assets. Think of it as a mutual fund for properties. This is where multiple investors pool their money to invest in large-scale real estate projects. These assets can include anything like office buildings, shopping malls, hotels, data centers, and warehouses.

So, under this, the investors do not buy the property directly. They just purchased some units of a real estate investment trust. This gives them fractional ownership. Rental income or dividends are shared among investors.

In India, real estate investment trust companies are regulated by SEBI (Securities and Exchange Board of India). As per SEBI norms, every REIT must distribute at least 90% of its net income to investors. This is mainly to ensure transparency and accessibility. And there is no need for physical holding.

Key Features

• Distributes at least 90% of income as dividends.

• Units are listed and traded on stock exchanges.

• Provides exposure to diversified property portfolios.

• Managed by professional real estate experts.

• Regulated by SEBI for transparency and safety.

• Allows small investors to enter the real estate market.

• Offers steady rental-based income and potential capital gains.

Types of Real Estate Investment Trust (REIT)

Knowing the different types of real estate investment trust companies is important. While all these work in the same way, their key focus might be different. So, here are the types of real estate investment trusts in India:

1. Equity REITs

Here, the income-generating properties are owned and managed. These include offices, malls, and hotels. Investors earn primarily from rental income. Sometimes, they also gain potential property value appreciation. They are the most common type of real estate investment trust India offers.

2. Mortgage REITs (mREITs)

They do not own real estate directly. Instead, they provide loans or invest in mortgage-backed securities. The earnings are mainly through the interest payments. These REITs are more affected by interest rate changes compared to others.

3. Hybrid REITs

These combine the features of both equity and mortgage REITs. This is why the investor can gain from interest and rent both. This helps manage risk and return in a balanced manner.

4. Publicly Listed REITs

These REITs are listed and traded on major stock exchanges. The buying and selling of securities is quite easy for them. These are liquid, transparent, and offer quite easy access, as per SEBI rules of safety.

5. Private REITs

Private REITs are not listed on stock exchanges. These are mainly open to qualified institutional or high-net-worth investors. They tend to be less liquid and offer higher returns.

6. Public Non-Listed REITs

These are registered with SEBI but are not traded publicly. They are not so much liquid in nature, but also offer good returns. Also, volatility is low with stable income.

How Real Estate Investment Trust (REIT) Works

A Real Estate Investment Trust (REIT) works by pooling money from multiple investors. The proper steps that are followed are as follows:

1. Capital Collection

REITs raise money from retail and institutional investors. This is by an Initial Public Offering (IPO) or private placements. The pooled funds are used for investing then. 

2. Property Investment

The collected capital is invested in commercial properties. This is mainly invested in properties like buildings, offices, and so on. 

3. Revenue Generation

The real estate investment trust companies earn revenue. This can be in the form of rent, lease income, or even interest and sales proceeds.

4. Income Distribution

As per SEBI guidelines, every real estate investment trust in India must distribute at least 90% of its net income to investors in the form of dividends.

5. Trading on Stock Exchanges

Publicly listed REITs are traded on a list of stock exchanges like shares. Investors can buy or sell REIT units anytime. This offers high liquidity and transparency. 

6. Value Appreciation

Over time, if the value of the underlying real estate portfolio increases. This helps the investors gain from their investment. 

Pros and Cons of Real Estate Investment Trust (REIT)

When you plan to invest in a REIT, it is important that you know all the pros and cons of the investment well. So, let us now explore the pros and cons before moving ahead. 

Pros

• Regular income and payouts. 

• Offers high liquidity as these are traded on NSE and BSE. 

• Proper diversification to reduce risk and losses.

• Better returns due to professional management.

• No need for physical holding and watching.

• Better transparency and accessibility are assured.

• Investor safety at the peak.

• Allows small investors to invest in real estate.

Cons

• No physical holding or ownership.

• Volatile returns are based on the market conditions.

• Dividends and gains can be taxable.

• Investors have no control over property decisions.

• Sensitive to economic cycles and rate hikes.

• Focuses more on income stability than rapid capital growth.

Top Real Estate Investment Trust (REIT) Companies in India

Below are some of the best real estate investment trust companies in India. 

Note: The data is as of 5 Nov 2025 and is bound to change. Check details before investing. 

Conclusion

A Real Estate Investment Trust (REIT) is one of the most convenient ways to participate in India’s growing real estate market. With no risk of management or holding, this is an option that allows you to gain good returns on your investment. All this is there stably and consistently, which is just great.

If you are planning to explore REIT investments, start by comparing the performance of top REITs. See which of them aligns with your goals. To learn more about smart and simple investment options, visit Rupeezy. Build your portfolio with expert guidance and support here. 

FAQs

How are REITs different from mutual funds?

While mutual funds invest in stocks or bonds, REITs invest in income-generating real estate properties and distribute rental income to investors.

Can REITs provide capital appreciation?

Yes. Along with regular dividends, REITs may offer long-term capital gain. This is when the value of the property rises.

Are REITs suitable for long-term investment?

Yes, REITs are ideal for long-term investors. It offers consistent returns and low risk as compared to a few other options. 

Do REITs face market risks?

Yes, REIT prices can fluctuate. This can be due to changes in various conditions, like interest rates or economic conditions. 

Can I sell my REIT units anytime?

Yes. You can sell REIT units easily on the stock exchange. This ensures transparency and high liquidity.