What is the role of REITs in India’s residential real estate?

Real Estate Investment Trusts (REITs) in India have primarily focused on commercial assets, but residential REITs are an emerging concept that may revolutionize how people invest in housing.

Key Advantages of REITs:

• Investment Accessibility: REITs let retail investors buy shares of a real estate portfolio, eliminating the need for large capital upfront.
• Diversified Portfolio: By pooling multiple properties, a REIT spreads risk across varied locations and segments. Even if one asset underperforms, investors remain partially buffered.
• Regular Income: REITs distribute 90%+ of net rental income as dividends, creating a steady income stream. This contrasts with direct residential ownership, where you rely on a single tenant’s rent.
• Lower Management Burden: Professional property managers handle maintenance, tenant sourcing, and legal compliance, sparing individual investors the hassles of landlord duties.
• Market Impact: Although currently focusing on office and retail spaces, future expansions into residential REITs could enhance liquidity and transparency in the housing market.

As REIT structures evolve, more developers might bundle rental housing portfolios to attract a broader investor base, making residential real estate more accessible and liquid over time.