Real Estate Investment Funds

For years, the real estate and housing market has been one of the most preferred investment avenues for investors. However, real estate prices have risen so much that it has become difficult for small investors to purchase property. 

 

Today, these investors can put their money in Real Estate Investment Funds/Trusts (REITs) or Real Estate Mutual Funds . These schemes enable one to earn dividend income by investing in real estate properties like: 

  • Apartment complexes

  • Infrastructure

  • Corporate buildings


To know more about REIT Funds, their benefits, and who can invest in them, read on.

What are REIT Mutual Funds?

Here, it is important to understand two investment tools here: REIT Funds and Real Estate Mutual Funds. Real Estate Investment Trusts (REITs) allow you to invest in properties, including apartment complexes, healthcare buildings, infrastructure, etc.

 

On the other hand, Real Estate Mutual Funds are investment instruments that enable investors to invest in REITs, indices, and real estate stocks.

Features and Benefits

Higher Liquidity

While a landed property is considered illiquid, REIT funds take much lesser time if you wish to buy or sell them

Flexibility in Investment

 As per the SEBI’s rules, you can start investing in REITs in as little as ₹10,000-₹15,000

Long-term Returns

If you stay invested in REIT funds for a longer duration, these funds can allow you to earn higher returns

Portfolio Diversification

Adding Real Estate Mutual Funds to your investment portfolio can help you diversify it

Hedge Against Inflation

As inflation rises, the value of real estate properties as well as their rent increases. Hence, these schemes are a good hedge against inflation

Stability in Portfolio

The real estate mutual fund returns are quite stable and aren’t very volatile

Professional Management

REIT mutual funds are professionally managed by fund managers and these professionals make the required decisions to maximise earnings

Alternative to Purchasing Property

Investing in Real Estate Mutual Funds saves investors from the massive undertaking of buying property

Downsides

The following are the risks associated with investments in REIT mutual funds:

  • Interest Rate Risk

One of the main factors that influence the overall returns on your REIT investments is the interest rate. Real Estate Mutual Funds do not offer flexibility to investors to decide how the fund needs to be allocated or which company stocks to be bought.  

  • Market Risk

The trends in the real estate market determine the returns that you can make on your investment in REITs. If the demand for properties in the market is high both in terms of rental property and outright purchase, your mutual fund will yield higher returns.

Who Can Invest in REIT Mutual Funds?

REITs and Real Estate Mutual Funds are the most favourable investment instruments for small investors who have a keen eye for the real estate sector. Real estate prices in India have been constantly rising since the 1990s. 

 

As such, it is difficult for many small investors to earn returns by investing in a property. Moreover, if you wish to diversify your portfolio, REIT funds also allow you to achieve this target.

Should You Invest in REIT Mutual Funds?

If you are seeking capital appreciation and exposure to the real estate sector, REIT mutual funds may be a preferred option for you. These schemes are also the best instruments if you want to invest in this sector but do not want to own physical property.

 

However, if you are thinking of investing in REIT Mutual Funds, there are a few factors that you need to consider. Most importantly, you must assess the prevailing trends in the real estate market. In addition to this, you also need to consider interest rates, demand and supply of real estate properties, and so on.  


Investing in REIT mutual funds is a great way to build wealth for small investors who are aware of the real estate sector. In addition to this, these funds also offer a higher level of diversity to your investment portfolio.

FAQs on Understanding Real Estate Funds

To invest in REIT mutual funds in India, you need to have Demat and trading accounts with a stockbroker. Once you have opened your account, you can start investing in these funds online through the stockbroker’s website or a financial advisor.

When selecting a REIT fund, you need to assess the performance, associated risks, fees, and expenses. It is also important to check if the fund’s objective aligns with your financial goals.

REITs or Real Estate Investment Trusts are instruments that invest in properties like apartment complexes, healthcare buildings, infrastructure, etc. On the other hand, Real Estate Mutual Funds allow investors to invest in REITs, indices, and equities of real estate companies.

As per the SEBI norms, the minimum investment required for REIT Mutual Funds is ₹10,000-₹15,000.

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