Real Estate Investment Trusts (REITs) offer NRIs a great way to invest in India’s real estate sector without directly owning physical property. With high liquidity, steady income, and diversification benefits, REITs are becoming a popular investment choice for NRIs looking to benefit from India’s growing commercial real estate market.

1. What are REITs?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate. It pools money from investors and invests in commercial properties like office buildings, shopping malls, and hotels.

Key Features of REITs:

✅ Diversified Real Estate Exposure – Invest in multiple properties
✅ Regular Income – Earn through dividends from rental income
✅ High Liquidity – Buy/sell on stock exchanges like regular shares
✅ Lower Investment Cost – No need to buy physical property
✅ Regulated by SEBI – Ensures transparency & investor protection

🔹 In India, REITs must distribute at least 90% of their net income to investors.

2. Can NRIs Invest in Indian REITs?

✅ Yes! NRIs can invest in Indian REITs under FEMA (Foreign Exchange Management Act) regulations. Investment can be made on a repatriation or non-repatriation basis.

How Can NRIs Invest in REITs?

✔ Stock Exchange – REITs are listed on NSE & BSE, just like stocks
✔ Mutual Funds – Invest in REIT-focused mutual funds
✔ Alternative Investment Funds (AIFs) – Some AIFs invest in REITs

🔹 NRIs need a Demat account & NRE/NRO account to invest in listed REITs.

3. Top REITs Available in India

Currently, India has three publicly listed REITs:

🔹 More REITs are expected in the coming years, including retail and hospitality REITs.

4. Benefits of Investing in REITs for NRIs

📌 No Property Management Hassles – No need to maintain, rent, or sell physical property
📌 Steady Income Stream – Earn regular dividends from rental income
📌 Capital Appreciation – REITs benefit from rising property values
📌 Easy Exit – Unlike real estate, REITs can be sold anytime in the stock market
📌 Hedge Against Inflation – Property values and rents tend to rise over time

🔹 REITs are ideal for NRIs looking for passive income from Indian real estate.

5. Taxation of REIT Investments for NRIs

A) Tax on Dividends

• Taxable for NRIs based on the REIT’s structure
• TDS (Tax Deducted at Source): 10% for residents, NRIs may have a higher TDS rate
• Can claim tax relief under DTAA (Double Taxation Avoidance Agreement)

B) Tax on Capital Gains

• Short-term (STCG – Holding <3 years) – Taxed at 15%
• Long-term (LTCG – Holding >3 years) – Taxed at 10% (above ₹1 lakh)

C) Repatriation of Funds

• NRIs can repatriate investment proceeds if made through an NRE account
• Capital Gains Tax applies before repatriation

🔹 Tax laws vary by country, so check DTAA benefits to avoid double taxation.

6. Risks & Things to Consider Before Investing in REITs

🚧 Market Volatility – REITs trade like stocks and may fluctuate in price
🚧 Interest Rate Sensitivity – Rising interest rates can reduce REIT returns
🚧 Limited REIT Options – Currently, only a few REITs are listed in India
🚧 Tax Deduction at Source (TDS) – Higher TDS for NRIs can affect returns
🚧 Exchange Rate Fluctuations – Gains may be affected by currency depreciation

🔹 NRIs should evaluate risk tolerance before investing in REITs.

7. Steps for NRIs to Invest in Indian REITs

Step 1: Open an NRI Trading & Demat Account

• Choose an Indian brokerage that allows NRI investments (e.g., Zerodha, ICICI Direct)
• Link it to an NRE or NRO account

Step 2: Get a PIS (Portfolio Investment Scheme) Account (For NRE account investments)

• Required by RBI for stock market investments in India

Step 3: Choose a REIT and Place an Order

• Buy REIT units through NSE or BSE like stocks

Step 4: Manage Your Investment & Track Performance

• Monitor NAV (Net Asset Value), rental income, and dividend payouts

Step 5: Understand Tax Implications & Repatriation Rules

• File tax returns in India and claim DTAA benefits if applicable

🔹 If investing through an NRO account, proceeds may have restricted repatriation limits.

8. FAQs on NRI Investments in REITs

1. Can NRIs invest in REIT IPOs?

✅ Yes, NRIs can apply for REIT IPOs through their Demat & Trading account.

2. Can NRIs invest in REITs without a PIS account?

✅ Yes, PIS is required only for NRE account investments, not for NRO account investments.

3. Is investing in REITs better than buying physical property in India?

✅ REITs offer liquidity, lower investment cost, and hassle-free ownership, making them a better choice for passive investors.

4. Are REITs a good investment for NRIs?

✅ Yes, REITs provide diversification, stable income, and capital appreciation, making them a low-risk way for NRIs to invest in Indian real estate.

5. Can NRIs sell REIT units anytime?

✅ Yes, REIT units are publicly traded and can be sold at market prices like stocks.

9. Final Thoughts: Should NRIs Invest in REITs?

REITs are a great option for NRIs who want to invest in Indian real estate without the challenges of direct property ownership. They offer:

✔ Regular dividend income
✔ Capital appreciation potential
✔ No property management hassle
✔ Higher liquidity compared to real estate

🔹 Ideal for NRIs looking for passive income from India’s booming real estate sector.

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