The Indian real estate sector is experiencing a significant transformation, as new models are making it more accessible to a wider range of investors. Traditional barriers to entry for real estate investments, which were typically limited to ultra high-net-worth individuals and experienced investors, are being disrupted by innovative alternatives such as real estate investment trusts (REITs), fractional ownership platforms, and real estate crowdfunding. These alternatives are attracting millennials and first-time investors with lower entry barriers, steady returns, and increased transparency.
REITs, in particular, are gaining traction as they allow small-ticket investors to own fractions of income-generating real estate assets. Although relatively new in India, the first REIT listed in 2019 has already delivered over 18% returns since its launch. REITs raise funds by listing units on exchanges and use these funds to acquire, develop, or manage commercial, residential, or industrial income-yielding properties. Rental income from tenants and capital gains from property sales are then distributed as dividends to unit-holders. With regulations mandating 90% of income as payouts, REITs have become attractive investment instruments.
Data shows that there is over 700 million sq. ft. of grade A office stock in India that is REIT-compliant, indicating immense potential for commercial REITs in the future. Additionally, experts believe that smaller REITs, known as small-cap REITs (SMREITs), are gaining popularity. In the US, SMREITs with real estate assets worth only $50-500 million have flourished despite lower trading volumes. Introducing SMREITs in India with a threshold of just ₹50 crore can attract increased retail participation in under-served niches like affordable housing.
Fractional ownership platforms are also expanding rapidly, offering options for co-investing in luxury properties. Small-ticket investors can now own fractions of expensive assets such as hotel rooms, resort villas, or office spaces by purchasing shares starting from just ₹10-25 lakh. These investments offer high rental yields that were previously out of reach for many investors. Holding periods, returns on investment, and occupancy guarantees vary across deals. Industry experts believe that top-tier developers partnering with fractional ownership startups promote trust and diversification into higher-return asset classes through bite-sized investments.
Real estate crowdfunding platforms are also emerging, pooling micro-investments in vetted projects. These platforms offer lower volatility compared to equities, passive income potential, and inflation-beating characteristics, making real estate an attractive portfolio asset. As technology improves transparency and millennials seek asset diversification beyond volatile equities, interest in these novel real estate investing channels is expected to grow. These alternative avenues, with their regulated structures and human interface, are seen as better wealth creators for first-time investors compared to crypto assets. The accessibility, trust, and favorable risk-return dynamics offered by these alternatives are transforming the real estate investment landscape in India, opening up the doors to the country’s largest asset class and bridging accessibility gaps for retail investors.
