For generations, retail real estate investment in India meant one primary pathway: purchasing a residential apartment or plot and leasing it out to tenants. However, low gross rental yields of 2.5% to 4.0% in major metros, combined with property management hassles, tenant turnover, and illiquid exit routes, have prompted investors to search for higher-yielding alternatives.
Commercial real estate—such as Grade-A IT parks, corporate headquarters, and logistics hubs—consistently generates gross rental yields of 8.0% to 9.5%. Yet, historically, commercial properties required capital outlays of ₹20 crore to ₹100 crore, restricting the asset class to institutional funds and ultra-high-net-worth individuals (UHNIs). While unregulated fractional ownership platforms previously attempted to bridge this gap, they operated through complex Special Purpose Vehicle (SPV) private limited company structures that lacked statutory investor protection.
The regulatory environment changed fundamentally with the notification of the SEBI (Real Estate Investment Trusts) (Amendment) Regulations, which formally established Small and Medium Real Estate Investment Trusts (SM-REITs). By regulating fractional ownership and setting the minimum investment threshold at ₹10 lakh, SEBI has introduced an institutional, stock-exchange-listed mechanism for individual investors to participate in commercial assets.