REITs Funds: Invest in Real Estate without buying real estate - experts tell how?

REITs Funds: Regulated by SEBI, REITs are companies that function, own or finance revenue generating commercial real estate. Combining the capital of several small investors, REITs make it possible for them to earn dividends from office property investments. Therefore, investors can earn dividends without the hassle of buying or managing any real estate directly. 

Buying a house, property, or real estate is seen as one of the safest investment options that give significant returns over time. However, not everyone is financially capable or willing to commit to a property by paying a huge amount of money. This is where Real Estate Investment Trusts (REITs) come into the picture. 

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According to the NSE website, REITs, since their inception in August 2007, have shown a negative return of 4.75 per cent. However, the last 365 days have shown significant growth for REITs. The NSE Realty Index has given an average return of 41.32 per cent from 365 days and 13.95 per cent from 30 days.

In fact, According to NSE, the Realty sector has done way better than automobiles, FMCG and certainly financial services, and more.

The REIT is a fund focused on the purpose of operating, owning and financing income-producing properties. REIT investments offer liquidity, unlike investments in buying real estate, similar to mutual funds. 

Here's what experts have to say about REITs

Ravi Singh, Vice President and Head of Research, Share India Securities, said, "Realty sector seems attractive in the long run, well supported by the government policies and infrastructure boost. The sector may give a return of 16-18% per cent in a year horizon. Godrej Properties, Oberoi Realty, DLF, NBCC, Macrotech Developer and Prestige Estate are stocks which investors may include in their portfolio for good returns."

"Real estate and stock investment comes with different risks and opportunities. Real estate are considered to be less liquid as compared to stocks and require big investment, although, it offers the potential of substantial appreciation. It's always wise to invest in realty stocks to get an early return and an opportunity to invest in a bouquet of realty companies," he added.

According to NSE Website, Godrej Properties have given an average return of approximately 21 per cent, and Oberoi Realty gave an average return of around 71 per cent in the last 12 months. 

Uddhav Poddar, MD of Bhumika Group, said, "REIT funds are felicitous for long term investment opportunities. It is much more plausible for retail investors to invest in A Grade Rent Yielding Assets through REIT funds, the availability of which in other cases is absent for small investors. REIT funds help in monetising the real estate assets, which is highly beneficial as the focus of the companies turns towards the execution of realty projects rather than its ownership. The demand for real estate investments is back to where it was, and its positive aftereffect will be seen in the results of the listed real estate companies. There are also high probabilities of many real estate companies that would go in for listing in the next 12-18 months."

Navdeep Sardana, CMD at EliteLandBase, said, "REIT Funds have enabled bringing about stable and professional management structure to the real estate sector. It serves as a good option for long term investment opportunities. REIT funds are tax-efficient and aid in legitimising and monetising real estate projects, making them asset-light properties and bolstering their ROI."

(Disclaimer: The views/suggestions/advice expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)