FEMA Export in Delhi
Fema Experts
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:
| REIT Name | Launched | Portfolio | Stock Exchange |
|---|---|---|---|
| Embassy Office Parks REIT | 2019 | Office Spaces | NSE & BSE |
| Mindspace Business Parks REIT | 2020 | IT & Business Parks | NSE & BSE |
| Brookfield India REIT | 2021 | Commercial Properties | NSE & BSE |
🔹 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.
🚀 Thinking of investing in REITs? Let’s discuss the best strategy for you!