REAL Estate Investment Trusts, or REITs, as they are called, have had a remarkable run in India, consistently delivering on key performance metrics. Offering a blend of benefits such as diversification, passive income, professional management, liquidity, steady dividend yields, and capital appreciation, REITs have firmly established themselves as a compelling investment vehicle since their introduction in 2019.
Currently, REITs account for 13.7 per cent (Rs 29,272 crore) of India’s overall listed real estate market, a stark contrast to the 60 per cent share globally. Their Gross Asset Value (GAV) has grown threefold since inception, achieving a robust CAGR of approximately 36 per cent. Moreover, cumulative distributions by REITs have exceeded Rs 14,300 crore since 2019, outpacing the combined dividends of Nifty Realty Index companies as of September 2023.
Leading the charge are Embassy REIT and Mindspace REIT, with their vast office space portfolios, while Nexus Select Trust has added diversity with its focus on retail assets, further enriching the sector’s income streams.
“Major growth drivers for REITs include increased institutional investment in real estate,” says Shobhit Agarwal, MD & CEO, Anarock Capital. “For instance, Rs 28,560 crore were raised through private equity investments in the first nine months of 2024, contributing 17 per cent of total sectoral investments. Similarly, Rs 12,801 crore came through qualified institutional placements (QIP), the second highest across all sectors, also at 17 per cent,” he adds. Agarwal believes these trends will continue to channel substantial capital into REITs. With a pass-through tax structure and lower equity market correlation, REITs remain a magnet for investors seeking stable yields, and their regular dividend payouts are likely to attract income-focused investors.
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