Indian Real Estate

REIT versus Fractional Investment


30, January 2026

Now we are seeing a slow rise of commercial real estate, as the world is coming out of the grip of the pandemic and everything is back to normal. This, in turn, means working from home is no longer the norm, as most companies are starting to call back their employees.

Though there is a chance of a worldwide recession on the cards, the commercial real estate of India is booming as Indian startups and tech companies are turning into profitable ventures and global icons. Many of these companies are opening up multiple office spaces across the metro cities of India. And now, the whole dynamics of commercial realty have changed with the popularization of REITs and Fractional Ownerships, where everyone can actually make a profit in real estate.

But what is the difference between these? Cause there are many of us who believe both are the same! So let's explore the factors that make each unique.

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What is a REIT?

REIT is the short form for Real Estate Investment Trust, which is an investment vehicle that sums up the money from multiple investors that invest in Profitable real estate opportunities, especially in CRE or Commercial Real Estate.

REIT is a lot like mutual funds and is the best choice for those who prefer an alternative to invest in real estate without owning a property. The money is invested into properties which are then leased out to business organizations, and the rental income is the total ROI. On average, the returns can range from 8% to 10 %.

However, the REIT holders cannot choose which properties are to be invested in. The first REIT in India was released in 2019. There are 3 major REITs in India, Embassy REIT,

Mindspace REIT, and Brookefield REIT.

Commercial Real Estate Assets of 3 Top Indian REIT

  • Embassy REIT: 42 million sq. ft

  • Mindspace REIT: 31 million sq. ft

  • Brookefield REIT: 14 million sq. ft

What is Fractional Real Estate Investment?

Fractional Real Estate Ownership/Investment, as the name suggests, is a real estate investment mode in which you can buy/invest in fractions of a real estate property.

The major advantage of this model is that you get to choose the properties that can be invested in and have a higher potential yield than buying the whole property. The amount of fraction you own based on ticket size or the minimum share that can be held by an individual. Fractional Investment options are booming now in the Indian CRE space. The market for Commercial real estate fractional investments is said to grow by a minimum of 18% in the coming years and might reach around 5 billion dollars.

What are the other major differences between Fractional Investment vs REIT?

  • Monitoring: REIT is monitored by SEBI, whereas Fractional Investment is not monitored by SEBI
  • Cost: REIT is comparatively cheaper as you can get yourself a REIT for approximately 10 to 15 K, whereas fractional ownership can cost lakhs together.
  • Additional Charges: In REIT, there are no other extra charges or upfront costs. Whereas in Fractional Investments, there are other charges like brokerage, maintenance etc.
  • Selection of Assets: In REITs, you are not free to choose the assets/properties that you can invest in, whereas you have that liberty in Fractional Investments
  • ROI: In REITs, there will be more or less consistent returns and are mostly liquid. However Fractional Investments, the returns might fluctuate.
  • Risk Profile: REITs often have a reduced risk profile because to their diverse portfolio, whereas fractional investments can be more volatile depending on the underlying asset.

  • Tax Implications: REITs frequently provide pass-through tax benefits, which means income is taxed at the individual level, but fractional investments may have varied tax effects depending on the asset.

  • Geographic Exposure: REITs can provide exposure to certain geographical areas, whereas fractional investments can provide worldwide diversification.

  • Minimum Investment: REITs often have lower minimum investment requirements than fractional investments which are particularly for high-value assets.

  • Ownership: REIT shareholders own a portion of the corporation, whereas fractional investors own a portion of one specific asset.

  • Liquidity: REITs are very liquid and trade on stock exchanges, whereas fractional investments have different liquidity based on the platform and asset.

  • Professional Management: REITs are professionally managed by a team of experts, whereas fractional investments frequently need self-management or require platform-provided tools.

  • Asset Class: REITs primarily invest in real estate properties, although fractional investments might include more kinds of assets such as real estate, art, and collectibles.

  • Legal Entity: REITs are legally formed as corporations, but fractional investments are usually individual units of underlying assets.

  • Capital Gains Tax: Capital gains from REITs are usually treated as long-term capital gains, which have lower tax rates than ordinary income.
    Capital gains tax treatment varies according to the asset type and the investor's tax situation.

To conclude,

Both REIT and Fractional Investments are both significant real estate investment modes; however, just as with any other investment, for that matter, you have to think clearly before investing.

We hope you liked our write-up about the difference between REIT and Fractional Investments. Share your thoughts in the comments.

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Fractional Investing: Benefits, Risks, and How It Works

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