{"id":6656,"date":"2025-10-23T12:19:02","date_gmt":"2025-10-23T06:49:02","guid":{"rendered":"https:\/\/1finance.co.in\/magazine\/?post_type=blog&p=6656"},"modified":"2025-12-12T10:37:45","modified_gmt":"2025-12-12T05:07:45","slug":"the-history-of-reits-in-india","status":"publish","type":"blog","link":"https:\/\/1finance.co.in\/1f-dashboard\/blog\/the-history-of-reits-in-india\/","title":{"rendered":"The REIT revolution: History of Real Estate Investment Trusts and how they made real estate accessible"},"content":{"rendered":"

You are walking through a buzzing city on a regular weekday. Maybe it\u2019s Mumbai, where towering skyscrapers and colonial-era buildings tell stories or Pune, where IT hubs and exquisite residential complexes blend a cosmopolitan energy with a quieter lifestyle, or Hyderabad, where HITEC City stretches across wide roads. <\/span>That instant, irresistible pull we feel while watching these marvellous infrastructures makes us think, \u201cOne day, I will own a piece of this city\u201d, but the very next second gives a taste of reality: property prices soaring beyond imagination. Buying even a flat or a fraction of a commercial building requires crores of rupees.<\/span><\/p>\n

That barrier was broken in 2019 when India revolutionised the real estate market for retail investors through real estate investment trusts (REITs). Investing in high-value commercial properties has now become just one click away, all because REITs completely flipped the script. This story provides a historical perspective on REITs: how they started and how they evolved.<\/p>\n

What are REITs?<\/span><\/h2>\n

Real estate investment trusts (REITs)<\/span><\/a> are investment tools that allow you to invest in income-generating properties, such as business parks, hotels, or shopping malls. These properties generate rental income from companies leasing the space, and that income is distributed to REIT investors, usually in the form of dividends.\u00a0<\/span><\/p>\n

Instead of investing lakhs and crores in real estate, you invest a small amount in a REIT, which pools capital from thousands of investors like you. For example, isn\u2019t it brilliant that you only have to invest \u20b910,000 into an apartment that may cost you \u20b91 crore? A REIT makes it possible.<\/span><\/p>\n

How REITs started as an investment option<\/span><\/h2>\n

Let\u2019s rewind to the 1960s in the United States of America to understand how REITs came into being.<\/span><\/p>\n

Year 1960: The REIT Act<\/b><\/p>\n

The American president Dwight D. Eisenhower passed the REIT Act, allowing regular investors to participate in large-scale, income-generating real estate through listed entities called REITs. It was a game-changing moment for the common people, and by extension, for India too, though the story took a little longer to unfold.<\/span><\/p>\n

Year 1960-1961: Initial REITs debut in the USA<\/strong><\/p>\n

The first REITs were created. They are Bradley Real Estate Investors, Continental Mortgage Investors, First Mortgage Investors, First Union Real Estate,\u202fPennsylvania Real Estate Investment Trust, and\u202fWashington Real Estate Investment Trust.<\/span><\/p>\n

Year 1965: First NYSE-listed REIT<\/b><\/p>\n

\u201cContinental Mortgage Investors\u201d became the first REIT that listed on the New York Stock Exchange (NYSE).<\/span><\/p>\n

Year 1966-2007: The global expansion of REITs<\/b><\/p>\n

Other countries like the Netherlands (1969), Australia (1971), and Canada (1993) joined the same trend. Later, Japan (2001), France (2003), Germany (2007), and the U.K. (2007) introduced REIT frameworks, turning Asia into a growing REIT hub.<\/span><\/p>\n

Year 2007 onwards: India laid the groundwork for REITs<\/b><\/p>\n

SEBI began exploring REIT regulations, but faced delays due to tax uncertainties and the global financial crisis of 2008.<\/span><\/p>\n

Year 2014: SEBI introduced REIT regulations in India<\/b><\/p>\n

SEBI officially notified the REIT regulations, providing the first legal framework for REITs in India, setting rules for governance, structure, and asset criteria.<\/span><\/p>\n

Year 2016\u20132018: Regulatory updates and tax clarity<\/b><\/p>\n

SEBI introduced regulatory updates and clarified tax treatment of REIT income, addressing key hurdles for market readiness.<\/span><\/p>\n

Year 2019: India\u2019s first REIT listed – Embassy Office Parks REIT<\/b><\/p>\n

Embassy Office Parks REIT became India\u2019s first publicly listed REIT in April 2019. It was co-sponsored by Embassy Group and Blackstone Group and focused on rent-generating commercial office space.<\/span><\/p>\n

Year 2020\u20132023: The growth of REIT in the Indian market<\/b><\/p>\n

Mindspace Business Parks REIT (2020) and Brookfield India REIT (2021) succeeded it. By 2023, India had three listed REITs with increasing retail investor participation and growing institutional interest.<\/span><\/p>\n

Year 2023\u20132025: Introduction of Small and Medium REITs (SM REITs)<\/b><\/p>\n

SEBI introduced smaller-ticket REITs (SM REITs) in 2024, enabling fractional ownership models for retail investors.<\/span><\/p>\n

Over time, REITs expanded globally, with over 40 countries today having REIT frameworks in place.<\/span><\/p>\n

Why REITs started as an investment option<\/span><\/h2>\n

Think about the high ticket size (you can\u2019t just invest \u20b950,000 in a flat, right?), the lack of liquidity (you can\u2019t sell a house overnight), and no consistent <\/span>rental income<\/span><\/a> (forgot about the deadbeat tenants?). There were just too many challenges for regular investors that made the process anything but friendly.<\/span><\/p>\n

The following table gives how REITs solved the challenges for investors when it came to traditional real estate investing.<\/span><\/p>\n

Traditional real estate vs REITs: A comparison<\/h2>\n\n\n\n\n\n\n\n\n\n
Traditional real estate<\/strong><\/td>\nHow REITs solved it<\/strong><\/td>\n<\/tr>\n
You couldn\u2019t just invest \u20b910,000 in a flat. You needed lakhs or crores.<\/span><\/td>\nREITs allow you to invest with just a few thousand rupees.<\/span><\/td>\n<\/tr>\n
Selling a property can take months, if not longer.<\/span><\/td>\nREIT units are listed on stock exchanges, where you can buy or sell them easily like stocks.<\/span><\/td>\n<\/tr>\n
Tenants default, properties remain vacant, and maintenance can chip away your returns.<\/span><\/td>\nREITs distribute rental income regularly as dividends, with no tenant-related drama.<\/span><\/td>\n<\/tr>\n
Dealing with agents, unclear titles, and legal red tape is exhausting.<\/span><\/td>\nREITs are regulated by SEBI, following strict reporting norms.<\/span><\/td>\n<\/tr>\n
Owning property means managing tenants, maintenance, and legal issues.<\/span><\/td>\nREITs are professionally managed, so you get the benefits of ownership without operational headaches.<\/span><\/td>\n<\/tr>\n
Buying one property ties up all your capital in a single location.<\/span><\/td>\nREITs invest in multiple properties across locations and sectors, reducing risk.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Scroll right to view full table \u2013><\/p>\n

However, reliability and safety concerns, another challenge, trailed behind. That\u2019s when the Indian market regulator, the Securities and Exchange Board of India (SEBI) stepped in.<\/span><\/p>\n

SEBI\u2019s REIT regulations over the years<\/span><\/h2>\n

Since day one, SEBI has set clear rules and regulations to promote transparency and protection of your REIT investments.<\/span><\/p>\n

Key SEBI regulations about REITs every investor must know<\/span><\/p>\n

1. SEBI (Real Estate Investment Trusts) Regulations, 2014<\/strong><\/p>\n

The first set of REIT regulations laid down rules for structure, minimum asset size, income distribution, and governance.<\/span><\/p>\n