Exploring alternative real estate investment vehicles: REITs, crowdfunding and more

financialexpress.com:

The Indian real estate sector is undergoing a monumental shift, with innovative models throwing open gates to an asset class confined to ultra HNIs and seasoned investors. As emerging alternatives like REITs, fractional ownership platforms and real estate crowdfunding disrupt traditional paradigms; they carve out a niche for millennials and first-time investors through lower entry barriers, steady returns and transparency.

“In the face of escalating real estate prices per square foot, alternative investment avenues such as REITs, fractional ownership, and discounted bank-financed properties are emerging as robust options. Moreover, they introduce sachet-sized investment options, potentially enticing millennials to engage with real estate as an investment category,” says Sridhar Samudrala, Founder, Hecta.

REITs (real estate investment trusts) allow small-ticket investors to own fractions of income-generating real estate assets. Although new in India, the performance of the first REIT listed in 2019 has caused ripples – delivering over 18% returns since launch. REITs raise funds by listing units on exchanges, then utilize these funds for acquiring, developing or managing commercial, residential or industrial income-yielding properties. Rental income from tenants and capital gains from property sales are then distributed as dividends to unit-holders. Regulations mandate 90% of income as payouts, making them attractive instruments.

Also Read: Should you keep jewellery at home or in a bank locker? Find out

Data indicates over 700 million sq. ft. of grade A office stock in India is REIT-compliant, revealing immense potential for commercial REITs going forward. Moreover, experts believe the concept of smaller REITs is gaining