The Indian real estate market is growing and REITs will be a major contributor to this development. This article enumerates the challenges and prospects of REITs in India and concludes that though the establishment of Indian REITs will be challenging, it will pave the way to solidify India's position as a financial hub.

Investment in real estate has been difficult for the small investors till date as such investments require a large amount of money. Even when one thinks of taking a loan, he has to wade through the long-standing and costly legal processes, tying up the loan and the hassles of the registration process. Moreover, due to the long gestation period in the sector, the money remains blocked for a substantial period of time.

Apart from this, investors need to do a lot of brainstorming over finding the right property in the right location and also to ensure that its value won't depreciate over time. There is the risk of making a wrong choice while selecting a real estate fund in which case the investors could be saddled with a non-performer. Diversifying one's investment in multiple properties reduces the risk. But this will weigh on the pocket of a small investor. A small investor hitherto had no other option but to stand on the sidelines and watch the big players pocketing the gains from investment in properties that seemed to be ever-increasing in value. But now the small investor can also participate in the real estate boom through the REITS route.

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