How to start investing in REITs in India: A simple 4-step guide

REITs allow retail investors to invest in premium real estate that was once available only to large institutions and high-net-worth individuals. They offer regular rental income, potential price appreciation, and professional management while being as easy to buy and sell as stocks.

With four listed REITs in India—Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Brookfield India Real Estate Trust—managing assets worth ₹1,52,000 crores, this investment option has become a popular choice for Indian investors.

If you are new to REITs, here’s a simple 4-step guide to get started.

Step 1: Open a Demat and Trading Account

To invest in REITs, you need a demat and trading account with a SEBI-registered brokerage. If you’re new to investing, you’ll also need to complete the Know Your Customer (KYC) process, which involves verifying your identity, address, and financial details. Link your bank account to ensure smooth fund transfers for your investments.

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Step 2: Research REITs and Their Performance

The Indian REIT market has grown rapidly since its launch in 2019. Collectively, these REITs distributed ₹4,259 crores in the first nine months of FY25, marking a 15% YoY growth from ₹3,706 crores in 9M FY24 (Source: IRA Data).

Before investing, research the listed REITs by looking at:

• Property locations, occupancy rates, and quality of tenants
• Past performance and dividend history
• Management team experience
• Key financial metrics like Net Operating Income (NOI), distribution yield, debt levels, and property valuations

Step 3: Buy REIT Units

Once you’ve chosen a REIT, log in to your trading platform during market hours and place your order. You can use:

• Market Order – Buy at the current price for immediate execution.
• Limit Order – Set a preferred purchase price and wait for the order to be executed.

Once your trade is successful, REIT units will be credited to your demat account within T+2 days (where T is the trading day). You can invest in REITs with a small starting amount, making them accessible to retail investors.

Step 4: Monitor Your Investment

To maximise returns, keep track of your REIT investments regularly. REITs must distribute at least 90% of their Net Distributable Cash Flows (NDCF) to unitholders once every six months, so watch for distribution announcements.

Stay informed about:

• Market trends affecting commercial real estate
• Changes in the micro-markets where your REIT owns properties
• New property acquisitions or developments that could impact returns

Review your investments quarterly to ensure they align with your financial goals and make adjustments as needed.

Risks to Consider

Like any investment, REITs come with risks, such as:

• Fluctuations in REIT prices, affecting potential profits
• Economic downturns impacting commercial property demand
• Sensitivity to changes in interest rates
• Sector-specific risks (e.g., remote working affecting office space demand)

Final Thoughts

Indian REITs operate under strict SEBI regulations to protect investors. They must distribute 90% of their net distributable cash flows, get their properties independently valued every six months, and publish half yearly and annual reports for transparency.

Before investing, consult a financial or tax advisor to understand how REIT distributions might be taxed based on your individual situation.

With proper research and monitoring, REITs can be an excellent way to gain exposure to real estate without the challenges of direct property ownership.

(The author Pratik Dantara is Head – Investor Relations & Strategy, Nexus Select Trust and Executive Committee Member, Indian REITs Association. Views are own)