REITs, or Real Estate Investment Trusts, are a great choice if you want to profit from real estate without owning any. Some investors are intrigued about a less well-known kind of REIT, though: non-traded ones. We shall define non-traded REITs, their advantages and disadvantages, and whether Indian investors should give them thought on this blog.
Non-traded REITs: What are they?
Real estate investment trusts classified as non-traded REITs are not traded on stock markets. Like standard REITs, they gather funds from investors and make investments in income-generating assets including:
- commercial buildings
- warehouses
- Apartment buildings
- Accommodations
You cannot, however, purchase or sell these on a stock exchange like NSE or BSE as they are not traded publicly.
Important Characteristics of Illiquid Non-Traded REITs
- You cannot readily sell your investment anywhere
- Long lock-in terms, usually five to seven years or more
- regular payouts, but dependent on performance
- Nav-based pricing rather than market pricing
- Usually presented by wealth managers or brokers, not stock brokers
Publicly Traded REITs vs Non-Traded REITs
| REITs Not Traded | Traded REITs | |
| List on Exchange | ❌ No | ✅ Yes |
| Liquidity | Low | ✅ High |
| Transparency | Low | ✅ Moderate High |
| Entry Route | By means of broker/advisor | Via stock markets |
| Returns | dividends; regular, if available | dividends; regular, if available |
Benefits of Non-Traded REITs
- more potential than traded REITs
- Less market-linked volatility since they don’t follow swings in stocks.
- Being around first-stage or exclusive real estate projects
- may provide variation from conventional wisdom.
Drawbacks of non-traded real estate investment
- Hard to leave early; years of locking money
- Less openness regarding property specifics and navigational aids.
- Extra fees and commissions paid to brokers
- Hazard of inadequate performance or poor management
- No daily pricing; might not fairly represent actual value
Exist non-traded REITs for India?
Publically traded REITs in India include Mindspace Business Parks REIT, Brookfield REIT, and Embassy REIT. Non-traded REITs are not especially common on India’s market as of yet. Still, some unlisted real estate investment vehicles and private real estate funds behave similarly—often accessible to institutional investors or HNIs via private placements.
How might Indian investors access non-traded REITs?
- Investing in U.S.-based non-traded REITs (such as Blackstone or Starwood) using global investing platforms run under RBI’s LRS
- Through wealth managers providing unlisted real estate investment products
- Using Alternative Investment Funds (AIFs) concentrated on real estate (minimum investment required)
Thoughts on Last Notes
Though they have good income potential, non-traded REITs are not appropriate for everyone—especially if you need quick access to your money. Before starting, Indian investors should be aware of the risks, lock-ins, and fee policies. Publically traded REITs are a safer and simpler option if liquidity and openness are priorities.
