Real estate as an asset class has traditionally been a popular choice for investors, but the emergence of commercial real estate as a sub-asset class has brought new opportunities for investors looking for higher rental yields. With the rise of tech platforms and listing of Real Estate Investment Trusts (REITs), this asset class has become more accessible to the general public. SEBI’s introduction of MSM REITs is set to further revolutionize the real estate investment landscape in India.
REITs offer investors the chance to invest in a portfolio of commercial properties, similar to owning units of a mutual fund. However, with MSM REITs, investors can make property-specific investments tailored to their unique requirements. This level of customization allows investors to have more control over their investment decisions, akin to owning shares of individual companies.
When considering which MSM REIT to invest in, factors like asset quality, location, lease structure, demand/supply dynamics, and management quality should be carefully evaluated. Diversification across asset classes and geographies is crucial to mitigate risks associated with individual investments.
While MSM REITs come with their own set of risks, including tenancy, interest rate, and liquidity risks, they present a unique opportunity for investors to gain exposure to rent-generating commercial assets with a larger ticket size than regular REITs. As the industry matures, MSM REITs are poised to bring further growth and diversification to the commercial real estate market in India.