Independence Day Special: Breaking Barriers To Property Ownership

Post-liberalization, a spate of reforms initiated by successive governments—particularly a series of regulatory reforms for the real estate sector undertaken by the Modi government—has made real estate ownership truly inclusive by making property affordable and accessible to millions of real estate and home seekers.

Physical property had long been out of reach for most retail investors due to high prices and the risks associated with the safety of investments in an unregulated real estate sector. However, the landmark Real Estate (Regulation and Development) Act (RERA) of 2017 completely transformed the opaque and risky real estate investment landscape, making property investments regulated and secure.

In the evolving real estate landscape, the advent of niche segments such as REITs (Real Estate Investment Trusts) and fractional ownership has completely revolutionized real estate investments by democratizing property ownership. These two distinct property-buying models have, in a short span of time, made real estate ownership far more inclusive.

REITs became a reality in India in 2019 with the launch of Embassy Office Parks REIT. Today, there are four operational REITs—Brookfield India REIT, Mindspace Business Parks REIT, Nexus Select Trust REIT, and Embassy Office Parks REIT. The IPO for the fifth REIT (Knowledge Realty Trust REIT)—the largest so far—was launched on August 7.

In just seven years since their inception, REITs have established themselves as a highly attractive asset class for retail investors, as reflected in their immense popularity. Today, the market capitalization of REITs, which collectively manage over 129 million square feet of Grade A office and retail assets, has crossed ₹1 lakh crore. Their overwhelming success can also be gauged from the fact that the Knowledge Realty Trust REIT IPO was oversubscribed 13 times—speaking volumes about the growing appetite for REITs among retail investors.

REITs have made it possible for retail investors to indirectly own expensive real estate previously out of their reach. Investors can now buy units (shares) of REITs through their stock market accounts, similar to purchasing regular shares, but with much smaller capital requirements. Beyond easy ownership, REITs offer other benefits, including stable returns from capital appreciation and rental income. According to SEBI and stock market data, REITs have delivered around 7% annual yield and double-digit (12–13%) total returns. These high returns are enabled by regulations requiring REITs to invest 80% of their total funds in high-yield commercial real estate and distribute 90% of their post-tax profits to investors as dividends. Since inception, REITs have distributed over ₹24,300 crore in profits to investors, including ₹1,371 crore in Q1 FY26 alone.

Professionally managed REITs allow investors to tap into the high-potential real estate sector to create long-term wealth without the risks of owning physical property. Unlike physical real estate, entry and exit are much easier with REITs, as units can be bought and sold digitally just like other stocks. In response to growing popularity, REITs have expanded into SM REITs, offering retail investors opportunities to invest in high-quality, lucrative properties by pooling resources. The minimum investment threshold for SM REITs is ₹10 lakh.

The concept of fractional ownership has further enhanced affordability and inclusivity in property ownership. This model allows retail investors to pool funds and collectively own high-value properties with promising returns—whether pre-leased Grade A offices, SCOs, retail outlets in gated societies, studio apartments, or second/luxury holiday homes. The model is now expanding into newer segments such as warehousing. Those unable to purchase an entire property can own a fraction of one, with investments starting at ₹10 lakh and potential average rental yields of 8–12%. Several platforms have emerged to facilitate such investments.

The Pradhan Mantri Awas Yojana (PMAY), part of the government’s flagship ‘Housing for All’ program, has also played a key role in democratizing property ownership by improving home affordability. For first-time buyers of affordable housing (priced below ₹45 lakh), the government introduced an interest subsidy of ₹2.67 lakh under CLSS, which has now been reduced to ₹1.80 lakh under PMAY 2.0.

Although more retail investors are turning to REITs for structured, safe, and high-yielding investments, a large potential remains untapped. Of the 520 million square feet of REITable office stock in top cities, only 23% is listed. Furthermore, the growing scope for redeveloping aging commercial properties and the rapid growth of Grade A and green commercial real estate present a significant opportunity for the expansion of REITs and fractional ownership—further driving the democratization of real estate ownership.

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