Are REITs emerging as the new alternative to mutual funds?

For generations, the dream of every Indian family was built on a foundation of roti, kapda aur makaan, and owning a physical piece of land was an imperative. A home wasn’t just a place for shelter. It was also a symbol of financial security and social acceptance.

As the Indian economy opened up in the 1990s, a new financial pillar began to take shape: Mutual Funds. For the very first time, Indian investors invested in an asset class that was not tangible, such as real estate, gold, or silver. Using Systematic Investment Plans (SIPs), thousands of households moved away from the ‘safety’ of fixed deposits and gold to participate in the growth of the stock market.

But even as SIPs became common, the aspiration to own real estate never faded. It just became more expensive. For many investors, the dream of owning a home, especially in a metropolitan city, started to feel out of reach as prices outpaced middle-class salaries.

In 2026, this real estate dream is undergoing yet another transformation as physical land ownership is being replaced by digital convenience. Real Estate Investment Trusts (REITs) are gaining popularity as the logical evolution of the Indian investment story, as they bring together the familiarity of real estate with the simplicity of mutual funds.

The ‘digital’ landlord

While the emotional pull of real estate remains, it comes with several barriers such as hefty down payments, complex paperwork and the struggle to find reliable tenants. This has led many investors to choose the path of REITs, which are fulfilling the makaan dream in ways previous generations could not have imagined.

By converting iconic IT parks and luxury malls into liquid units, they allow you to own a stake in India’s prime real estate for a price not much more than what you would pay for a weekend movie-going experience. This offers something different from a traditional mutual fund: the satisfaction of a regular rent cheque combined with the long-term growth of prime real estate.

The shift from growth to yield

The main draw of an equity SIP is capital appreciation. However, as certain sectors face increased volatility, some investors remain wary of paper gains that could fluctuate with market sentiment.

REITs promise to offer a different financial proposition. Unlike equity funds, where returns are purely market-driven, REITs are built on contractual rental income.

Building a SIP for real estate

For the average investor, one of the biggest entry barriers to real estate has been the high entry cost. Buying a prime office in a city like Mumbai or a mall space in Bengaluru requires significant capital. REITs have changed this. By allowing investors to buy as little as a single unit priced between ₹300 and ₹500, REITs make a ‘Real Estate SIP’ possible.

Through Rupee Cost Averaging, you can systematically build ownership in a diversified portfolio. Over time, these small monthly allocations accumulate into holdings in major business parks and retail hubs. You can essentially become a part-owner of global corporations without having to deal with the hassle of managing tenants or paying for the maintenance of these properties.

Stability and the 2026 regulatory changes

While stock investments can experience significant valuation swings, one advantage of REITs is that their value is anchored in physical buildings. In a significant move, the Securities and Exchange Board of India (SEBI) reclassified REITs as equity-related instruments on 1 January 2026 for taxation purposes.

This change allows mutual fund managers to include them more easily in equity schemes, increasing liquidity for retail investors. Additionally, with REITs set to be included in major equity indices from July 2026, the asset class is gaining greater visibility and institutional backing.

All in all, as an investor, you no longer need to make a choice between the volatility of capital markets and the safety net offered by debt. REITs offer an investment that balances the transparency of the stock market, the reliability of a rent cheque, and a stake in India’s urban future.