REIT returns are not just about rental income: 65 70% comes from capital gains

Listed Indian Real Estate Investment Trusts (REITs) are increasingly being viewed as a total-return investment, rather than simply a way to earn regular rental income. According to a recent sector note, around 65–70% of trailing 12-month returns from listed Indian REITs came from appreciation in unit prices, while the remaining returns came through distributions.

REITs allow investors to participate in income-generating commercial and retail real estate without directly purchasing a property. Their regular distributions are supported by rental and operating income from the underlying assets. However, the recent performance shows that capital appreciation in listed REIT units can also play a significant role in overall returns.

This trend is important for investors looking at alternatives to direct property investment. Instead of focusing only on rental yield, investors are increasingly considering both income and market-value growth when evaluating REITs.

The sector note also highlights the attractive yield profiles of listed Indian REITs. However, REIT prices can fluctuate with market conditions, interest rates, property performance and investor sentiment, so returns are not guaranteed.

News Source: Business Today