REITs, or Real Estate Investment Trusts have been one quiet performer that’s steadily rewarded those who stuck around, this while most investments have struggled to bring any real joy over the past year
In a year where the Nifty has barely moved, midcap stocks have been all over the place, and even real estate stocks and properties have underwhelmed, REITs have quietly done their job and done it well. Take Mindspace Business Parks REIT for example, it’s up nearly 25% in the last year. Brookfield India REIT isn’t too far behind either, clocking an 18% gain.
So, what’s making REITs click in this kind of market?
Well, they’re the perfect mix of growth and income. Like stocks, they can gain in value. Like bonds, they pay out regular income – usually via dividends. That makes them a pretty neat addition to any investment mix. Sure, the yields may not beat government bonds right now, but when you add up capital appreciation plus income, the total returns tell a different – and better – story.
Take Mindspace again, it’s clocking an XIRR of 16%, which is miles ahead of many peers in the REIT space who sit around 8-10%. Like most good investments, the key has been sticking with it.
And the story doesn’t stop there. The pipeline looks strong. India just got its fourth listed REIT – Knowledge Realty Trust – which was oversubscribed nearly 5 times and brought in ₹1,620 crore from big names like the Rakesh Jhunjhunwala Trust, LIC, Fidelity, ADIA, and GIC.
As India becomes a hotbed for global capability centres (GCCs) and more multinationals set up shop, the demand for Grade A office space is only going to rise. That means more rent, more income, and more reasons for investors to smile. Add to that the latest quarterly results, and REITs are still looking rock solid, offering perhaps one of the most reliable plays in today’s uncertain investment climate.
Let the Numbers do the Talking
Let’s talk performance and Mindspace Business Parks REIT is walking the talk. For the June 2025 quarter, it posted a 24% jump in net operating income, hitting ₹616 crore. That’s a solid number. It also announced a distribution per unit (DPU) of ₹5.79, which is 14% higher than last year, though a bit lower (10% down) compared to the previous quarter.
July brought another milestone – Mindspace made its first third-party acquisition outside of its own parks. It picked up Mack Soft Tech Pvt Ltd, which owns ‘Q-City’, a sleek 0.81 million sq. ft. office space in Hyderabad’s financial district. That’s a smart addition to its Grade A portfolio.
Ramesh Nair, CEO and MD of Mindspace REIT, sounded upbeat on the earnings call. He said they’re bullish about the long-term story, thanks to strong assets, sticky tenants, and a proactive leasing strategy. They’re also betting big on smart acquisitions and in-house development to keep the momentum going.
So what’s the return story?
As of FY25, Mindspace’s dividend yield stood at 5.1% – the lowest among the three listed REITs, because its stock price jumped 23% over the year, which naturally brought down the yield.
Here’s how the others stack up:
—-Embassy REIT is dishing out the highest yield at 5.9%, but only saw a 6% price gain. It’s trading around ₹393 per share.
—-Brookfield REIT offered a 6.1% yield and gained a solid 18% in price over the same period.
Looking at a longer time frame: Brookfield leads with a 4-year CAGR of 29%, Embassy comes next at 13%, Mindspace follows at 11%
In Q1 of FY26, Brookfield’s net operating income hit ₹500 crore, while Embassy clocked in a bigger number at ₹871 crore.
Now here is where it gets intresting – even though dividend yields have dipped a bit, thanks to capital appreciation, the overall returns are looking strong. Especially when you consider that the Nifty 50 delivered just 2% over the last year. In short, REITs haven’t just outperformed real estate stocks, they’ve comfortably beaten broader market returns too.
REITs vs Real Estate Stocks
If you’ve been tracking the Nifty Realty Index, you’d know it hasn’t exactly been a joyride this past year — in fact, it’s mostly been in the red. On the flip side, REITs have quietly stolen the spotlight.
Let’s look at the numbers. Mindspace REIT is up a solid 25% over the last 12 months. Meanwhile, Godrej Properties is down about 30%, and Lodha Developers has barely moved – up just 1%. Apart from Lodha and Anant Raj, most real estate stocks haven’t done much to cheer investors.
So why are REITs doing better?
Unlike traditional realty stocks that depend on construction progress and new project launches, REITs make money from leased commercial properties. Think stable, recurring rental income instead of the unpredictable earnings cycles of builders. In a market where consumer sentiment is shaky and people are cutting back on big spends, REITs come across as the safer, steadier option.
According to Prashant Thakur of Anarock, India has about 850 million sq. ft. of Grade A office space, but only 18–20% is under REITs. That leaves a massive runway for future growth. Plus, post-COVID, there’s been a surge in leasing activity especially driven by Global Capability Centres (GCCs). Many of the newer, high-quality office projects are finding takers fast.
In fact, leasing across 2023 and 2024 crossed 50 million sq. ft., with GCCs accounting for 33% of that – a major factor behind the solid REIT performance.
Prithijit Chaudhury from Integrow AMC breaks it down further: most leases include an annual rent escalation of around 5%, which means your income as an investor keeps compounding. And because these spaces are typically leased by deep-pocketed MNCs, the risk of default is low, which adds another layer of comfort.
A recent Axis Securities report echoed this sentiment, calling out Embassy REIT in particular for its strong footing. The report said Embassy is entering FY26 on a high note with record leasing, a premium tenant base, and a 38% re-leasing spread. Add to that over 80% of its upcoming projects already pre-leased, and you’ve got a REIT that’s locked and loaded for growth, even with the global macro scene looking iffy.
Gold, REITs, and AIFs, What Sets Them Apart
When it comes to diversifying your portfolio, investors today are not just choosing between stocks and bonds anymore. Gold, REITs, and Alternative Investment Funds (AIFs) are now getting serious attention and for good reason. They’re all very different in structure, strategy, and what they bring to the table.
Let’s break them down.
Gold: The Classic Safe Haven: Gold has always been the go-to asset when things get shaky whether it’s inflation, war, or currency swings. It’s not flashy, but it’s reliable.
According to Abhishek Khudania from Client Associates, gold continues to be a dependable hedge, especially in times of global tension. In fact, it’s even outperformed equities in some recent periods. Most high-net-worth investors allocate 5–15% of their portfolios to gold, not for growth, but for stability and diversification.
REITs: Real Estate, Minus the Hassle: REITs are a great way to get into real estate, without buying property or dealing with tenants. These are funds that invest in income-generating commercial spaces like office parks and malls.
Vinayak Magotra from Centricity WealthTech sums it up nicely: REITs offer a passive way to earn regular dividends, while giving you exposure to high-quality commercial properties. No managing, no paperwork.
India’s REIT space is growing fast. The sector has already crossed a ₹1-lakh crore valuation, and Khudania notes that they offer yields around 7% – combining rental income with potential capital appreciation. With a stronger regulatory setup and improving liquidity, REITs are also becoming more transparent and tax-efficient.
AIFs: For the Sophisticated Investor: Now if you’re looking for something a bit more high-conviction, AIFs might catch your eye. These are non-traditional investment vehicles that can include private equity, venture capital, hedge funds, and even pre-IPO opportunities.
By December 2024, AIFs in India had attracted over $150 billion in commitments, a massive number. Magotra says AIFs stand out for their custom strategies, like long-short equity and niche sector plays. Khudania adds that returns can range from 12–18%, and since AIFs don’t move in sync with the stock market, they help smooth out overall portfolio risk.
Liquidity & Tax: Not All Equal
Not surprisingly, each of these options has a very different liquidity profile:
Gold is the most liquid – easy to buy or sell, in physical or digital form.
REITs are traded on stock exchanges, but volumes can vary based on market conditions.
AIFs? Not so liquid. They often come with lock-in periods and are better suited for long-term investors.
Tax-wise, things also differ. Sudhir Kaushik from TaxSpanner explains that under the new tax regime (NTR), the Section 87A rebate doesn’t apply to capital gains. So while NTR keeps things simple, it may not be ideal if you’re booking heavy gains, like from REITs or AIFs.
So, Which One Should You Pick?
There’s no one-size-fits-all answer here, it depends on your goals and risk profile.
- Gold is great for those looking to add some stability and inflation protection.
- REITs work well if you want regular income and indirect exposure to real estate.
- AIFs are ideal if you’re okay with risk, have a longer horizon, and want to tap into private markets and advanced strategies.
In the end, it’s all about understanding what each instrument offers and how it fits into your broader financial game plan.
