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Want to know more about REIT, is it safe, how much return do you get ?
REITs let you own properties fractionally. India has 3 listed REITs - Embassy, Mindspace and Brookfield, which can be traded like any stock on the exchange.
So let's say a 1cr residential property in a tier 1 city will yield a rental income of ~29k pm which is 3.5% (whitefield , Bangalore, 2022, data - 99acres).
Two things here, 1 cr is a big amount for a young investor and rental yield of residential properties in India is very low 2-4%. Hence they can get started early with a REIT investment systematically (SIP), investing in commercial properties.
So with REIT, an investment of 1 cr. will fetch 40-50k pm at 5-6%(or more) distribution yield. Also there is no headache for the owner to manage tenants. The property management of businesses renting the units will be done by REIT managers and trustee.
Safety of the asset depends on quality of the business. Some analysts say that in India REITs are a bit opaque in terms of their operations as compared to the US, where this asset class is very old and over 200+ REITs are listed.
Growth is expected to be gradual and correlated with asset price appreciation.