If that’s the case, then please explain why people buy homes that don’t yield even 3% rental yield? And here we are talking about entire India, where everyone buys home/flat, why can’t everyone live on rent forever?
Now, compare it with REIT that’s offers yield comparable to fixed income instrument (~7%), in properties that are hard to replicate (grade one commercial offices) and offers protection from inflation with rising rentals over time.
Yes, agree, the yields are almost flat since last 5 years, but that’ss due to big blows this industry has suffered, which include :
- COVID, which reduced the demand by half due to Work from Home culture
- Interest rates rise in last couple of years.
I think past is not the mirror of future for REIT’s, time will tell if this turns out to be pragmatic or foolish statement.
Disclosure – Invested and Biased, may turn blind
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