The adoption of REITs in Hyderabad has grown tremendously, and the city may lease an additional 1.8 million square feet in the near future. In September 2022, 12.7 million REITs were adopted compared with 12.6 million in September 2021. Madhapur is the location of Mindspace REIT, the largest REIT in Hyderabad.
What are REITs
REITs are nothing but real estate investment trusts.
A REIT is operated by a company and distributes the rental income to the investors.
To understand in s simpler way,
First, a real estate property will be constructed by a group of investors till the end. The investors will be varies depending on the budget of the property and their investment capital.
As soon as the project is completed, the company lists for an IPO. According to the size of the property, the investors will receive the appropriate amount. Upon listing the property on the stock exchange, a company will manage the property, pay rent, and divide the rental income with investors as dividends. The share of the property can be traded.
REITs are three types
- Equity REITs
- Mortgage REITs
- Hybrid REITs
Equity REITs are nothing but directly investing in real estate.
A dividend will be paid from the rental income of the property.
Mortgage REITs allow investors to own property mortgages.
Here dividend will be paid from the interest earned from the loan.
Hybrid REITs are the combination of both Equity and Mortgage.
Why it is rising?
Due to their ease of acquisition and feasibility, REITs are becoming more popular in Hyderabad. REITs are managed by a highly experienced entity that provides numerous benefits to the tenants.
A REIT consists of numerous towers beside each other. As most companies belong to a single industry, there will be no disturbances to the employees.
Mindspace Madhapur REIT offers tenants 11.5 million sqft of office space to tenants.
Mindspace REIT is valued at 19,000 crores approximately and has an average rental yield of 61 rupees per sqft.