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REITs and Alternative Investments

Category: Investment Products Type: Hybrid / Alternative Last Updated: 2026-06-08

Overview​

Alternative investments provide diversification beyond traditional stocks and bonds. These assets are not typically linked to stock or bond markets, offering potential for higher returns and portfolio risk reduction.

REIT (Real Estate Investment Trusts)​

What are REITs?​

Real Estate Investment Trusts allow investors to own commercial real estate without large capital requirements.

Key Characteristics:

  • Pooled investment in income-generating real estate
  • Regular rental income distribution
  • Professional management
  • Liquidity (listed on stock exchanges)
  • Lower entry barrier compared to direct real estate

Types of REITs​

  1. Commercial REITs: Office buildings, retail spaces
  2. Residential REITs: Apartment complexes
  3. Industrial REITs: Warehouses, logistics centers
  4. Healthcare REITs: Hospitals, medical facilities

Indian REITs Performance​

Indian REITs Returns

REIT vs InVIT​

REITs (Real Estate Investment Trusts):

  • Focus: Commercial real estate
  • Assets: Office buildings, malls, warehouses
  • Income: Rental income from tenants

InVITs (Infrastructure Investment Trusts):

  • Focus: Infrastructure assets
  • Assets: Roads, power transmission, telecom towers
  • Income: User fees, tolls, lease rentals

Read: REIT vs InVIT Difference

Should REITs Be in Your Portfolio?​

Pros:

  • Regular income (rental yields typically 6-8%)
  • Real estate exposure without property management hassle
  • Inflation hedge
  • Portfolio diversification

Cons:

  • Interest rate sensitivity
  • Market volatility (though less than stocks)
  • Limited capital appreciation compared to direct property

Read: Do REITs Deserve a Place in Your Portfolio?

Fractional Real Estate​

Platforms enabling retail investors to own commercial real estate in smaller proportions.

How It Works:

  1. Platform identifies investable Grade A property (commercial building/warehouse)
  2. Property has existing long-term tenant (ensures cash flow visibility)
  3. Investors buy fractional ownership
  4. Monthly rental income + price appreciation over time

Platforms:

  • Strata - Investment in commercial property
  • PropShare
  • Others

Fees:

  • Annual asset management fee: ~1%
  • Share of profits above hurdle rate

Benefits:

  • Low entry barrier (few lakhs vs crores for direct ownership)
  • Professional management
  • Monthly rental income with built-in escalations
  • Capital appreciation potential

P2P Lending (Peer-to-Peer Lending)​

Direct lending to borrowers through online platforms, bypassing traditional banks.

How It Works:

  • Platforms match lenders with borrowers
  • Lenders earn higher interest (12-35% vs FD rates)
  • Borrowers get customized approval, competitive rates
  • Platform provides: onboarding, credit evaluation, disbursement, collections

Platforms:

  • Faircent
  • Lendbox
  • LiquiLoans
  • RupeeCircle

Key Features:

  • Select borrowers by: profile, location, loan reason, tenure (3-36 months)
  • Desired interest rate: 12-35%
  • Risk mitigation through diversification across multiple borrowers

Risks:

  • Default risk (borrower non-payment)
  • Platform risk (platform shutdown)
  • Illiquidity (cannot exit mid-tenure)
  • Regulatory changes

Invoice Discounting​

Financing working capital by purchasing vendor receivables at a discount.

How It Works:

  1. Vendor supplies goods/services to buyer
  2. Payment due in 30-90 days
  3. Vendor sells invoice to investors at discount for immediate cash
  4. Investors earn return when buyer pays full amount

Platforms:

  • KredX
  • Jiraaf
  • TradeCred

Investment Details:

  • Minimum: Rs 50,000 (varies by deal)
  • Tenure: 30-90 days (short-term)
  • Returns: Pre-tax IRR up to 15%
  • Invoices broken into fractional parts for smaller investors

Use Case: Small businesses fulfilling working capital requirements

High Yielding Fixed Income Investments​

Alternative to traditional FDs with higher yields.

Platforms:

  • Wint Wealth
  • BondsKart
  • AltiFi

Product Types:

  • Government bonds
  • AAA rated papers from lending institutions
  • BBB rated corporate bonds (higher risk, higher return)
  • Private bond placements
  • Structured debt

Features:

  • Investment as low as Rs 10,000
  • Higher interest than FDs
  • Range of risk-return profiles

Art Investments​

Masterworks​

Platform for buying and selling shares in iconic artworks.

  • Fractional ownership of high-value art
  • Professional authentication and storage
  • Liquidity through secondary market
  • Returns from art appreciation

Website: Masterworks

Other Alternative Investment Platforms​

Startup/Private Equity Platforms​

Growpital: Growpital

  • Agricultural investment opportunities

Tyke Invest: Tyke

  • Invest in Indian startups
  • Angel investing opportunities

Alternative Investment Strategy​

Allocation Guidelines:

  • Start small (5-10% of portfolio)
  • Diversify across alternative types
  • Understand risk-return profile
  • Ensure adequate liquidity in traditional assets
  • Due diligence on platforms and underlying assets

Not linked to stock/bond markets - Acts as portfolio hedge and diversification

Higher returns - Potential for above-market returns

Access to unique opportunities - Investments not available through traditional channels

Risks to Consider​

  1. Illiquidity: Difficult to exit before maturity
  2. Platform Risk: Dependence on platform solvency
  3. Regulatory Risk: Evolving regulations
  4. Complexity: Requires understanding of underlying assets
  5. Higher Fees: Management fees reduce net returns
  6. Default Risk: Borrower/investee may fail to pay

Tax Implications​

  • P2P Lending: Interest taxed as "Income from Other Sources" (slab rate)
  • REITs: Rental income + capital gains (refer to latest tax rules)
  • Invoice Discounting: Returns taxed as interest income (slab rate)

Consult tax professional for latest regulations.

References​