REIT, fractional ownership gaining momentum in commercial space
Real Estate

REIT, fractional ownership gaining momentum in commercial space

Indian REITs are primarily skewed toward IT-occupied assets. As the government prepares to disinvest in different classes of assets, these funds would gain more traction and REITs can become more broad-based, finds E Jayashree Kurup.

Commercial real estate is a popular segment for institutional investors owing to its tangible nature and steady returns. The current pandemic has opened gates to new technologies where the investors are adding real estate assets to their portfolios without the need of managing physical property. By allowing investors to own fractions of it, REIT has become an affordable option, further helping to mobilise money from many retail investors. 


A fractional model or REIT allows investors to invest in premium commercial properties and earn a monthly rental yield. Through REIT, buyers can now manage and sell income-generating assets on an entirely online platform through a fractional investment model. Such properties can generate good rental yields besides offering an extremely promising appreciation. 
 
The demand in the Indian real estate sector has always been outpacing the supply, especially in urban cities. REIT investments are witnessing a surge, especially in metro cities with IT professionals, which are mostly 85-95% tenanted, and even during the pandemic there were no significant exits from these properties. Since most of these are integrated complexes, the F&B outlets, food courts, and hotels in the complexes also contribute to the monthly income. 
 
Any domestic, foreign, retail, or institutional investor can purchase REIT units. One can buy shares of REITs like any other shares on the stock exchange, through demat accounts and the buying and selling can be done on NSE or BSE, upon listing. To sum up, REITs or fractional investments are lucrative as they can generate good rental yield if planned wisely. 
          

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Indian REITs are primarily skewed toward IT-occupied assets. As the government prepares to disinvest in different classes of assets, these funds would gain more traction and REITs can become more broad-based, finds E Jayashree Kurup. Commercial real estate is a popular segment for institutional investors owing to its tangible nature and steady returns. The current pandemic has opened gates to new technologies where the investors are adding real estate assets to their portfolios without the need of managing physical property. By allowing investors to own fractions of it, REIT has become an affordable option, further helping to mobilise money from many retail investors. A fractional model or REIT allows investors to invest in premium commercial properties and earn a monthly rental yield. Through REIT, buyers can now manage and sell income-generating assets on an entirely online platform through a fractional investment model. Such properties can generate good rental yields besides offering an extremely promising appreciation.  The demand in the Indian real estate sector has always been outpacing the supply, especially in urban cities. REIT investments are witnessing a surge, especially in metro cities with IT professionals, which are mostly 85-95% tenanted, and even during the pandemic there were no significant exits from these properties. Since most of these are integrated complexes, the F&B outlets, food courts, and hotels in the complexes also contribute to the monthly income.  Any domestic, foreign, retail, or institutional investor can purchase REIT units. One can buy shares of REITs like any other shares on the stock exchange, through demat accounts and the buying and selling can be done on NSE or BSE, upon listing. To sum up, REITs or fractional investments are lucrative as they can generate good rental yield if planned wisely.           Click here to read more

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