Why REITs Are Gaining Popularity Among Indian Investors in 2026

ELI5/TLDR

A REIT lets you own a slice of a giant office building or mall for the price of one share — about 126 rupees in the case of the guest’s own trust — instead of needing a crore in cash and a lifetime of tenant headaches. It collects rent, hands at least 90% of the leftover cash back to investors every quarter, and the rents climb a bit each year. The pitch is that you get the steady payout of a bond plus a slice of the growth of a stock. In 2026 two rule changes — one letting REITs borrow cheaply from banks, one letting equity mutual funds buy them — have widened the audience and nudged payouts up.

The Full Story

This is a 15-minute NDTV Profit interview with Sheresh Gole, CEO of Knowledge Realty Trust (a roughly 55,000-crore office REIT with assets in Mumbai’s BKC). It’s promotional in flavor — the guest is selling his own product — but the mechanics he walks through are clean and correct.

Think of it as a mutual fund made of buildings

The whole thing rests on one analogy. A mutual fund holds a basket of stocks and issues units to investors. A REIT — real estate investment trust — does the same, except the basket is physical real estate.

“A REIT is a trust… but really likened to a mutual fund, which below it has a bunch of physical assets that it owns. And then on the other side, it issues units.”

You buy one unit, you own a sliver of the buildings. No crore of capital, no broker, no plumbing.

How the money actually reaches you

The plumbing is worth spelling out because it’s the part most people hand-wave. Tenants pay rent to the trust. The trust pays the running costs — maintenance, taxes, management. What’s left is the “distributable cash flow.” By law, at least 90% of that has to be paid out to unit holders. Every quarter the trust does the arithmetic — your share depends on how many units you hold — wires the cash, and ends up with nothing in the pot. Then the next quarter starts from zero again.

Two regulatory guardrails make this dependable. At least 80% of a REIT’s assets must be fully built, leased, income-producing property — so it can’t quietly turn into a speculative land developer. And the 90% payout rule means management can’t hoard the cash.

The two-engine pitch: yield plus growth

Gole’s core selling point is that most financial products give you one thing or the other. Bonds give yield, stocks give growth. A REIT, he argues, gives both.

“A real estate investment trust gives you both a stable yield and the opportunity for growth. And very few products in the finance space offer you both.”

The numbers he quotes: a post-tax yield of roughly 5–6%, paid quarterly. Because of how REIT distributions are taxed, that 5.66% post-tax is comparable to about 8% pre-tax from a fixed-income product. On top of the yield, rents in his leases rise at least 5% a year, and asset values appreciate. Add it up and he pitches 12–15% total annual return as a “decent assumption.” Worth noting: that top number is a projection, not a track record, and it leans on rents and property values cooperating.

Why bother, versus just buying a flat?

He makes the comparison to owning physical property directly, and it’s the most honest part of the segment. To buy real estate in India now you need at least a crore, then you have to find a tenant, manage repairs, and after all that a residential flat yields a measly 3–4%, an office maybe 7% before costs. And getting out is slow and painful.

“Why would you not simply just buy a REIT share which gives you a 6 to 7% kind of yield… You don’t have any of the management issues. You get in and out easily. It’s very liquid.”

Liquidity is the real edge — you can sell a REIT unit tomorrow; you cannot sell half an office floor tomorrow.

The 2026 rule changes

Two regulatory moves are the news hook. The RBI now lets REITs borrow from commercial banks, which wasn’t allowed before. Cheaper debt means slightly fatter distributions. But Gole is candid that this is a minor tailwind — REITs run with very low borrowing (low “loan-to-value”), so cheaper loans don’t move the needle much.

The bigger one came from SEBI: reclassifying REITs as an equity product. Previously they were treated like fixed income, so only hybrid or debt-focused mutual funds could buy them. Now any equity mutual fund can — a large new pool of institutional buyers suddenly allowed in the door.

Risks, eventually

Asked directly about risks, Gole deflects into another sales point first, then concedes the real ones: a COVID-style shock that empties offices, a structural shift in how people use real estate, and sustained high interest rates. His comfort blanket is scale — he likens his 55,000-crore portfolio to a cruise liner that’s hard to capsize. Diversification and size, he argues, ride out choppy water. The bull case for office demand specifically rests on India’s GDP growth and the “GCC story” — global companies parking back-office and tech operations (global capability centers) in Indian cities, keeping office space full.

Key Takeaways

• A REIT is structurally a mutual fund whose holdings are physical, income-producing buildings; you buy units instead of whole properties.
• By regulation, at least 80% of a REIT’s assets must be completed, leased, income-generating property, and at least 90% of distributable cash flow must be paid out to unit holders.
• Distributions are quarterly. The pot empties each quarter and refills from the next quarter’s rent.
• Typical post-tax yield is 5–6%; because of favorable tax treatment, ~5.66% post-tax is comparable to ~8% pre-tax fixed income.
• Growth comes from contractual rent escalations (at least 5%/year here) plus asset-value appreciation; the guest pitches 12–15% total annual return as a reasonable assumption (a projection, not a record).
• RBI now permits REITs to borrow from commercial banks — modestly cheaper financing, but limited impact since REITs run low leverage.
• SEBI reclassified REITs as equity, opening them to all equity mutual funds (previously only hybrid/debt funds could invest), widening the institutional buyer base.
• Five listed Indian REITs distributed 2,450 crore to over 3.8 lakh unit holders in a single quarter (figure cited in the intro).
• Main risks named: a demand shock like COVID, a structural change in real estate use, and sustained high interest rates.
• The bull case for office REITs leans on India’s GDP growth and the GCC (global capability center) trend keeping offices occupied.

Claude’s Take

This is a competent explainer wrapped around a sales pitch, and you should read it as both. Gole is the CEO of the REIT he’s praising, so when he says “should one buy a REIT? Absolutely yes” — that’s not analysis, that’s his job. The interviewer never pushes back hard, and the risk question gets dodged once before getting a real answer.

That said, the mechanics he explains are accurate and unusually clear for a finance TV segment — the mutual-fund analogy, the 80/90 rules, the rent-to-payout pipeline. The two-engine framing (yield + growth) is the genuine reason REITs occupy a useful middle slot between bonds and equities.

The number to hold at arm’s length is “12–15% annually.” That stacks a real, contractual ~6% yield on top of an assumed ~6–9% from rent escalation and value appreciation — and the second half only shows up if office demand and property prices keep climbing. He admits the downside scenarios (another COVID, high rates, a shift in office use) but frames his own scale as near-unsinkable, which is exactly what a captain says about a cruise liner. The unspoken weak spot: a REIT this concentrated in offices is a leveraged bet on the GCC story holding.

A 5 — accurate, accessible, genuinely useful as a primer on how the instrument works, but it’s a single-source promotional interview with no skeptic in the room, so treat the return projections and the all-clear on risk as marketing, not forecast.