Real estate has long been a favoured asset for Indian investors, but owning commercial property comes with high entry barriers. Large upfront capital, long-tenure loans, tenant management, maintenance hassles and illiquidity make direct ownership cumbersome.
Pratik Dantara, EPC member of the Indian REITs Association and chief investor relations officer and head of strategy at Nexus Select Trust, weighed in on whether Reits (Real Estate Investment Trusts) are the right alternative for accessing such premium property at the Mint Money Festival 2026.
The analogy Dantara drew was that of mutual funds. “You invest small amounts, own income-generating properties across the country, earn rental income, and buy or sell units like equity.”
A Reit invests in rent-yielding commercial assets such as office parks and malls. It is required to distribute 90% of its cash flows, typically on a quarterly basis. The structures are regulated by the Securities and Exchange Board of India (Sebi and professionally managed, removing operational hassles for investors. In India, the first Reit listed in 2019, and there are currently five listed Reits.
For investors, Reits promise to function as a hybrid between equity and fixed income. They offer relatively predictable cash flows through rental income, along with the potential for capital appreciation as property values rise and rents grow. Because they are listed, units can be bought and sold on exchanges, offering liquidity that physical real estate does not.
They can also serve as a diversification tool. Commercial real estate cycles do not always move in tandem with equity markets, making Reits a potential stabiliser within a broader portfolio.
Returns, risks and what to track
On returns, Dantara said Reits have delivered a balanced mix of regular income and capital appreciation, with average returns of about 17% over the past five years.
Risks in Reit investments are linked to real estate cycles. For instance, during events such as covid-19, rental waivers can affect distributions. Interest rate cycles also influence borrowing costs and acquisition spreads.
For retail investors evaluating Reits, Dantara suggested focusing on distribution yields, asset valuations published every six months by independent valuers and loan-to-value ratios. Sebi does not allow a Reit to borrow more than 49% of the value of its total assets.
“Most Indian Reits currently borrow only about 28-30%, which indicates that they have relatively moderate debt levels and lower financial risk,” Dantara said.
The idea is that investors who work in premium office parks or shop in large malls can now own a share of those same properties through Reits, without committing massive capital.
