Why REITs Could Change How Indians Invest In Real Estate

The second flat is one of India’s favourite investments. Buy it, put a tenant in, let the rent cover the equated monthly instalment (EMI), and sell it when the corridor develops. The arithmetic behind that familiar strategy, however, is weaker than its popularity. Residential rents in large Indian cities hover around 2-4 per cent of the flat’s value a year, before maintenance, property tax and the vacant months.

Commercial property runs on different arithmetic. A ‘Grade A’ office leased to a multinational earns rent in the range of 7-8 per cent of its value, with escalations written into the lease. That income has existed for decades. Individuals rarely touched it, because the entry ticket was the whole building.

A Building, Sold By The Unit

Real estate investment trusts (Reits), however, broke the ticket into units. 

Says Animesh Hardia, senior vice president – quantitative research and partner at 1 Finance: “A real estate investment trust owns a portfolio of these buildings, collects the rent, and is required by the Securities and Exchange Board of India (Sebi) to distribute at least 90 per cent of its net distributable cash flows to unitholders.”

India listed its first Reit in 2019. Today, there are 6 Reits, together holding roughly 200 million sq ft of offices and malls, and a single unit trades for a few hundred rupees in an ordinary demat account.

What The 6 Listed REITs Actually Paid

The recent scorecard explains the growing interest. In FY26, Embassy Office Parks grew its distribution 10 per cent to Rs 25.28 a unit. Mindspace paid a record Rs 24.09. Brookfield India paid Rs 21.40 per unit, up 11 per cent. Nexus Select, the retail Reit, delivered Rs 9.10 per unit, in line with its guidance. Knowledge Realty, listed in August 2025, has already paid Rs 4.74.

Adds Hardia: “Bagmane, whose Bengaluru campuses house Google and Amazon, saw its May 2026 issue subscribed nearly 25 times. At current prices, these payouts work out to yields of roughly 5-7 per cent. Occupancy across the six trusts runs between 93 and 99 per cent. Debt sits at 5-30 per cent of asset value, against Sebi’s ceiling of 49 per cent.”

The table below compares all six Reits. 

Source: Reit FY26 filings, press releases and investor presentations; Embassy and Knowledge Realty Q1 FY27 disclosures. Data as on 31 March 2026 unless stated in brackets. Bagmane's occupancy and LTV are its offer-document figures (December 2025); it listed on May 15, 2026, its first distribution is pending, and its yield is the offer-document FY27 projection at the Rs 100 issue price. Brookfield's LTV is the pro forma figure disclosed with Q4 FY26 results. Occupancy definitions vary by Reit (committed, by area, or by value); yields are indicative and move with unit prices.

What the Yield Hides

The trade-offs deserve equal billing. Units swing with the market; so the income is steadier than the price. Distributions are variable, and part of each payout is taxed at your slab rate, which trims the post-tax yield for high earners. The portfolios lean on offices, and especially for Bengaluru, Mumbai and Hyderabad. So, a technology slowdown or an oversupplied corridor will show up in the numbers. A Reit hands you the building’s income along with the market’s moods.

From One Flat to a Hundred Tenants

The deeper change is behavioural. Adds Hardia: “Property in India has meant concentration: one city, one project, one loan, and usually one emotion attached. A Reit lets the same rupee spread across dozens of buildings and hundreds of tenants, with audited quarterly disclosures. The pattern repeats in household after household. Families hold two flats and worry about both. The same money, spread across listed rent-earning portfolios, would have paid more and worried them less.” 

So, treat the asset class the way it deserves. Real estate stays a slice of the portfolio, sized within a plan, after the emergency fund and before the ambitions.

A 10-Minute Test Before You Buy

If the idea interests you, start smaller than a purchase. Open one Reit’s latest quarterly presentation and check for three things.

1. The trailing 12-month distribution per unit, divided by the unit price.

2. The occupancy trend across 8 quarters.

3. The loan-to-value ratio.

Ten minutes of reading will tell you more about that building than most landlords ever learn about their flat.