Real estate is an attractive asset class that can grow your investments manifold. However, it can be high-priced and comes with its set of risks. Moreover, you may have to hold it for a considerable time to get substantial returns. For these reasons, it makes sense to invest in unique real estate projects that carry the name of a reputed brand and builder like Godrej Aqua.
Property in Bangalore is becoming dearer with time as the city is growing rapidly. The prices of apartments for sale in Bangalore are touching the sky. A young, salaried individual may find it difficult to purchase real estate for investment purposes.
However, if you are eager to purchase the right home, you can make it possible by availing home loan from trusted lenders like Bajaj Finserv Homes & Loans. Real Estate Investment Trust (REIT) is an effective alternative to invest in the sector. Having been in the making for several decades, the trust was formally launched in India this year.
Read along to know how you can benefit from it.
What is REIT?
REIT are securities that can be traded on the stock exchange. These securities are linked to real estate and in many ways are similar to mutual funds. A sponsor that has established the REIT acts alone or with other corporate bodies and is responsible for registering it with the SEBI. The REIT is managed by a trust that ensures compliance with laws and SEBI regulations. The trust also safeguards the general interests of investors and their hard-earned money.
The funds pooled in by the investors gets deployed in purchasing magnificent properties like Godrej Aqua, Bangalore. These properties are chosen after extensive research and careful due-diligence. The projects are critical in generating income for investors in the form of rentals and leases. Secondly, the appreciation of these projects also gets distributed amongst the investors as returns.
History of REIT in India
REIT has been a popular investment instrument abroad. It was only in 2013 when SEBI published the first set of guidelines for REIT. However, the governing body did not specify the tax implications related to it, as several aspects such as taxes applicable to the investors’ income were unclear.
It took several years before SEBI could reach an exhaustive and comprehensive set of regulations for REIT. In March 2019, the first IPO of REIT was launched in India.
What are the Advantages of Investing in REIT?
Minimal investment: Properties in Bangalore, mainly, commercial projects can be expensive. In some cases, wealthy investors too can find it challenging to invest in highly-priced projects. REITs make it possible for small investors to invest in attractive projects like Godrej Aqua in Hosahalli, as the minimum investment required is Rs 2 lakhs.
Tax-free income: The dividend earned by investors are tax-free. Long term capital gains are applicable if the investor chooses to hold the units for more than three years. On a lesser tenure, short term capital gains are relevant.
Assured dividend: The basic premise of REIT returns is the income generated from lease and rentals. India’s growth is unparalleled, and there is an increasing demand for commercial properties. Thus, revenue in the form of dividends is, more or less, assured.
Transparency: Since REITs are traded on the stock exchange, all details will be readily available to investors.
Stress and hassle-free: Buying a property can be a lengthy exercise. To begin with, a buyer must scan the market to look for apartments for sale in Bangalore. Secondly, buyers must perform due-diligence on the surroundings and potential problems. Thirdly, buyers need to arrange for funds and apply for loans to bridge any funding gap.
You can approach reliable lenders like Bajaj Finserv Homes & Loans to finance your dream home. Last, but not least, considerable time and resources go in signing the sales deed and registering the property.
REITs eliminates all these steps and allows an easy way to invest in real estate.
Added liquidity: Selling real estate can be a challenging task, and market conditions may not always be favorable. On the other hand, you can pull out of REITs as when time demands.
REITs are a relatively new concept in India and it could take some years before investors embrace it wholeheartedly. However, industry experts are pegging the returns in the range of 8-10%. All the other benefits, as listed above, makes it an attractive investment that can be explored.