REIT Mutual Funds in India: What are the Benefits of Investing in Them?
REIT Mutual Funds in India: An Overview
REITs are another form of real estate investing and this is a very attractive investment for those investors who do not have a large amount of money to buy land, buildings, or commercial buildings. Traditionally, only big investors having large sums of money could afford to invest in real estate but now with the advent of REITs, small investors having less money can also invest in real estate. REITs are similar to mutual funds. REITs is also known as real estate investment trust is a company that owns or manages real estate properties. The returns earned by the REITs are shared as dividends among shareholders. In this article, we are going to learn about REITs mutual funds, real estate ETF India, and the best real estate mutual fund in India.
What are mutual funds in real estate?
Mutual funds in real estate are funds that invest directly in commercial lands, residential complexes, stocks of real estate companies, corporate properties, and agricultural lands. Mutual fund real estate has options to invest directly in property or indirectly by investing in REITs (Real estate investment trusts). The fund is managed by experts to provide good returns to investors. REIT mutual funds in India provide capital to companies that are into real estate for developing property and managing. When the real estate company grows, the fund also makes money. Mutual funds real estate allows an investor to earn dividend income which is a great way to earn passive income.
- Real estate mutual funds collect money from investors who are looking to invest in real estate through mutual funds. They invest in real estate companies' securities.
- Real estate mutual funds provide steady and regular dividend income.
- Real estate mutual funds have invested in diversified properties across various geographical locations which lowers the risk.
Who can put money into real estate mutual funds in India?
Generally, investing in real estate requires a lot of capital and time but with the advent of REITs or real estate mutual funds India, one can invest in real estate with a lesser amount of money. Hence, both small and big investors can invest in real estate funds in India.
Investors do not have to track their investments every day as real estate mutual funds are managed by experts and professionals. Investing in real estate mutual funds allows investors to diversify their investments across various properties. However, real estate mutual funds returns are determined by some other factors such as market conditions, supply, and demand, interest rates, etc.
Benefits of Real Estate Mutual Funds in India
- Long-term returns: Real estate mutual funds investment can give you long-term returns if you stay invested for a longer time horizon. Real estate investments are associated with time as it involves a long time to process buying and selling property.
- Liquidity: Real estate mutual funds offer liquidity as investors are allowed to buy units of real estate mutual funds any time they want to whereas physical real estate investment offers low liquidity as it takes a long time to process buying and selling of property.
- Flexibility: Investors can invest in real estate mutual funds with as little as Rs. 5,000. Hence, it offers flexibility to small investors. Investors can put their money into real estate mutual funds as per their investment goals, time horizon, and risk appetite.
- Hedge against inflation: Investing in real estate mutual funds has often been considered protection against inflation. This is because the value of the property rises during inflation and so does the rent which will lead to an increase in the unit price of mutual fund real estate, hence favouring the investors.
- Alternative real estate investment: Mutual funds in real estate is an alternative investment to direct investment in real estate. Purchasing a physical property is time-consuming work as it involves tedious paperwork and risk.
- Stable returns: Real estate mutual funds provide stable returns as they invest in various properties which are diversified across different geographical locations.
- Diversification: REITs mutual funds can be added to your investment portfolio to achieve a diversified portfolio.
- Passive income: REITs mutual fund investment is a great way to earn passive income.
Best Real Estate Mutual Funds in India
Some of the best real estate mutual in India are given below.
- Embassy Office Parks REIT: The company was founded in the year 2017. It owns and manages 42.6 million square feet including office parks, and office buildings in major cities like Mumbai, Pune, Bangalore, and the National capital region.
- Brookfield India Real Estate Trust: For investors looking for a long-term investment with low risk then it is an attractive option. It has a well-diversified portfolio of properties (grade A offices and buildings) located across different geographical locations.
- Mindspace Business Parks REIT: The company was founded in 2020 and is headquartered in India. They are primarily into developing and managing commercial real estate properties. If you are looking for capital appreciation and a long-term bet then it would be a good investment.
To conclude, Investing in real estate mutual funds is a great way to diversify your investment portfolio. It is an attractive investment option for those investors who do not have enough money to directly invest in real estate. However, an investor should assess their investment goal, risk tolerance, investment horizon, and asset allocation before investing in REITs mutual fund India or real estate ETF India. Investors should study EPS growth and dividend income from the past years to maximize the returns.
Are real estate mutual funds India good to invest in?
Real estate mutual funds are good to invest in for those investors who want to invest in real estate but do not have enough capital to buy directly in real estate. Also, they don't have to indulge in maintaining the property.
How do REITs differ from real estate mutual funds?
REITs are real estate investment trusts that invest in properties whereas real estate mutual funds are mutual funds that pool money from investors to invest in REITs, indices, and real estate stocks. Real estate mutual funds are managed by fund managers.
How can I buy the best real estate mutual funds India?
You must have a Demat account to buy the best real estate mutual funds India. you can buy REITs units from the stock market as they are traded on stock exchanges.
Do REITs mutual funds pay dividends?
Yes, real estate mutual funds pay dividends on a quarterly or monthly basis and it is a great way to earn regular or passive income for investors.
What is the minimum investment amount to invest in REITs?
As per the SEBI’s notice on July 30, 2021, the minimum amount to invest in REITs is Rs. 10,000 to 15,000.