REITs Pay 90%: Is Your 'Safe' Income Actually Risky?

REITs look like FDs because they pay regular income, but they are stock-market-linked investments. Prices can fall, payouts can shrink, and your capital is at risk — just like any equity fund.

Here's what happened: REITs are market-linked instruments — unit prices rise and fall daily on stock exchanges, just like shares or equity mutual funds.. Indian REITs are required by SEBI rules to pay out at least 90% of distributable cash flows, which creates regular income but does not cap downside risk on your invested capital.. Most Indian REITs hold commercial real estate — office parks or retail malls — making their income sensitive to tenant occupancy, rental cycles, and corporate demand..

What you should do: Check what percentage of your portfolio is in REITs and treat it as equity exposure, not as a fixed-income replacement like FD or PPF.. Compare the distribution yield (annual payout ÷ unit price) of all four listed Indian REITs before investing — yields between 5–7% are typical, but capital gains or losses on the unit price can override that income.. Avoid putting money you need within 1–2 years into REITs — their prices are volatile and you may be forced to sell at a loss if markets dip..

REIT distributions in India are taxed as ordinary income (not at the 10% long-term capital gains rate), so high-tax-bracket investors should factor in post-tax yield before comparing REITs with tax-free bonds or PPF.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.