Why should you consider investing in REITs? The first reason is that they will allow you to diversify your portfolio beyond equities, fixed income, and gold. REITs invest in grade A commercial property. Investing directly in such properties is beyond the financial capability of many retail investors.
This is an asset class that is especially favoured by investors who desire a regular income, say, affluent retirees. REIT regulations make it mandatory for these investment vehicles to distribute 90 per cent of their cash flows to investors semi-annually.
The regulations have been framed in such a manner that REITs can’t invest in under-construction properties, which carry development risk. 80 per cent of their assets must be invested in completed properties.
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