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All you need to know about Real Estate Investment Trusts REITs

A new investment opportunity known as Real Estate Investment Trust (REIT) has been opened up for investors interested in obtaining returns from real estate sector. Finance Minister had announced in the 2014-2015 financial budget speech that some tax incentives would be provided for investors investing in REITs and other Infrastructure Investment Trusts (InvITs). Securities and Exchange Board has recently cleared the guidelines for setting up REITs and INvITs. With SEBI's approval, product manufacturers have been given the go ahead to launch products with a minimum investment of Rs. 2 lakhs in high end real estate properties.

Even though the concept of REIT is new in India, it has been existent for quite some time in developed countries.

What are REITs?

REITs are investment trusts that work just like mutual funds except for one difference. REITs invest in real estate assets. These assets, which include commercial and residential assets, generate returns for the investor. While mutual funds invest in equities (i.e shares), REITs invest in real estate. This makes it possible for even small investors to benefit from such trusts.