June 1, 2022

Positive Or Negative? The Inevitable Impact of REITS on Investor Sentiments Towards Real Estate

Mr Rakesh Reddy, Director , Featured Article on Construction Week Online

The aspects of the Realty sector have gone through phenomenal changes in India over the last few years. Especially, with the entrance of REITs- The Real Estate Investment Trusts, a professionally managed entity that finances, owns, and operates Real Estate assets to generate income for the investors in these vehicles. Since their introduction in India in 2017, REITs have been witnessing a gradual upward trajectory, even despite the pandemic and its aftermath. REITs and other similar fractional ownership mechanisms have brought on a rapidly growing interest in Real Estate investments. This has benefitted the Real Estate sector tremendously with more consumers encouraged to invest and developers gaining access to alternative funding.

REITs are designed to deliver value to all stakeholders, including investors, sponsors, and developers. Similar to a mutual fund-collecting money from investors and then investing in the stock market, a REIT will collect money from retail and institutional investors and deploy these funds in Real Estate assets. Typically, these will be commercial Real Estate assets such as offices and shopping malls that can generate consistent rental income.

REITs provide a solution to the inaccessibility of commercial Real Estate investment opportunities for retail investors. Offering a liquid, tax-efficient, well-managed tool allows retail investors to participate in commercial Real Estate. The initial success of REITs in India is a testament to the demand for commercial Real Estate by retail investors.

To read and understand further the impact of REITs on the current day Real Estate investment domain and on the investors’ mindsets, you must check out the in-depth article attached in the link below: