Considering the capital-intensive nature of the commercial real estate sector as an investment avenue and also the limited investment opportunities with regards to high-grade office assets, REITs (Real estate investments funds) will be a big boon for the Indian real estate industry. In simple terms, a REIT is an investment tool that owns and operates real estate assets and even allows individual investors to invest in and earn income through partial or equity level ownership of commercial real estate without actually having to buy those assets.
REITs are modelled after mutual funds, and provide their investors with all types of income streams – as well as the benefits of long-term capital appreciation. A REIT also trades on major stock exchanges and provides investors with a highly liquid stake in real assets typically offering high yields.
Over the last decade, globally, REITs have developed into a mature market force, providing easy access to high-quality assets along with stable return on investments. To illustrate – as of 2016, there were over 500 REITs operating across various countries, with total market capitalisation of more than US$ 900 billion.
Taking a closer look at REITs globally