Source: High Rise

You don't need to invest crores to take a bet on India’s biggest building projects anymore.

Real estate funds have drastically cut their minimum investment requirement to as low as Rs 5-10 lakh. We tell you how you can take advantage of this new opportunity.

Is that REIT?

You can now be a stakeholder in large properties such as this without shelling out a hefty sum. Though real estate mutual funds in India are still awaiting Sebi's nod, existing property funds are already structuring products to include a larger investor base in their fold.

The most recently launched real estate fund -- the IL&FS milestone fund has a minimum investment requirement of 10 lakh rupees -- that's the lowest among existing property funds that range from investment caps of Rs 25 lakh to Rs 5 crore.

“To create an analogy -- if you remember we used to do share trading through the physical form. Then came demat, then mutual funds happened and people were very comfortable. I think real estate to some extent is going through the same phase. We want to create a product where more and more people can participate,” says Ved Prakash Arya, MD, Milestone Capital Advisors.

Besides a low investment cap, the IL&FS Milestone fund is the first REIT-like structured fund to be launched in India.

Source of income

Real Estate Investment Trusts essentially invest in already rented out properties and provide a double income flow.

For instance, once it raises the capital, the Rs 1,000 crore IL&FS Milestone fund will invest in various properties like malls, warehouses or office buildings that already house tenants who are paying a monthly rent.

The rental yield is the regular income flow per annum that the fund will distribute to its investors on a quarterly basis. The second possible income from will be the returns on the capital appreciation of the property when it is sold.

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