Introduction
A few days ago, I published an analysis comparing two real estate investment strategies. One was a self-funded property purchase, and the other was financed with a home loan.
Both involved buying a physical property worth Rs. 1 crore, renting it out, and investing the surplus in a mutual fund SIP for 10 years.
The results were interesting. The self-funded route gave a final corpus of Rs. 2.76 crores with an XIRR of 10.56%. The home loan route gave Rs. 2.45 crores but a higher XIRR of 13.20%.
After that post, a natural question came to my mind. What if the same Rs. 1 crore was not invested in a physical property at all, but in REITs instead?
Would the return from REIT be higher or lower? And which REIT would give the best result?
That is exactly what I have tried to calculate in this post. And the numbers, honestly, surprised me.
A Quick Note on REITs in India
As of 2026, there are five listed REITs in India.
For this analysis, I have used the three most established ones:
- Embassy Office Parks REIT,
- Mindspace Business Parks REIT, and
- Brookfield India Real Estate Trust.
I have used their last 4-5 years of actual financial data to derive the assumptions for this analysis.
The financial data I used covers Balance Sheet, Profit & Loss, Cash Flow statements, and Key Ratios for each of the above three companies.
Step 1: Estimating Future Share Price Growth
For physical property, I assumed a price appreciation of 6.5% per annum.
I needed a similar number for each REIT. But this time, instead of simply assuming a number, I could derive it from the actual financial data.
For each REIT, I looked at two things:
- Tangible Asset CAGR – because REIT unit prices are closely linked to the value of the underlying properties they own
- Net Operating Profit Per Share (NOPPS) CAGR – because earnings growth drives market price over time
I gave each metric a 50% weight to arrive at a blended growth rate.
Then I applied a 30% conservatism discount to that number, to account for market risks and the fact that past growth rates do not always sustain.
Here is the detailed calculation:
1.1 Embassy Office Parks REIT
| Metric | FY21 | FY25 | CAGR |
|---|---|---|---|
| Tangible Assets (Rs. Cr) | 31,753 | 37,660 | 4.36% |
| Net Op. Profit/Share (Rs.) | 25.93 | 43.53 | 13.83% |
| Revenue (Rs. Cr) | 3,052 | 4,582 | 10.69% |
| Operating Cash Flow (Rs. Cr) | 1,870 | 3,079 | 13.27% |
Weighted growth rate (Asset 50% + NOPPS 50%) = 9.09%
After 30% conservatism discount = 6.36% – Rounded to 7% per annum
One note on Embassy: The FY25 operating margin dipped to 60.41% from 78.19% in FY24. This appears to be a one-time impact. The underlying OCF continued to grow strongly from ₹2,590 crore to ₹3,079 crore.
1.2 Mindspace Business Parks REIT
| Metric | FY22 | FY26 | CAGR |
|---|---|---|---|
| Tangible Assets (Rs. Cr) | 19,873 | 28,790 | 9.71% |
| Net Op. Profit/Share (Rs.) | 29.69 | 47.26 | 12.32% |
| Revenue (Rs. Cr) | 1,760 | 3,216 | 16.26% |
| Operating Cash Flow (Rs. Cr) | 1,159 | 2,413 | 20.11% |
Weighted growth rate = 11.02%
After 30% conservatism discount = 7.71% – Rounded to 8% per annum
Mindspace’s operating margins have been stable and improving at 78.11% in FY22. It dipped to 67.59% in FY23, and recovered to 75.79% by FY26. I think this is a healthy trend.
1.3 Brookfield India Real Estate Trust
| Metric | FY22 | FY25 | CAGR |
|---|---|---|---|
| Tangible Assets (Rs. Cr) | 13,632 | 23,680 | 20.21% |
| Net Op. Profit/Share (Rs.) | 26.17 | 40.22 | 15.40% |
| Revenue (Rs. Cr) | 876 | 2,444 | 40.74% |
| Operating Cash Flow (Rs. Cr) | 605 | 1,847 | 45.02% |
Weighted growth rate = 17.81%
After 30% conservatism discount = 12.46% – I’ve limited it to 7.5% (read below)
Here, I’ve applied additional judgment.
Brookfield’s high historical growth is partly because it was in a rapid expansion phase. Its tangible assets nearly doubled between FY23 and FY24 due to new property acquisitions.
Such acquisition-driven growth is unlikely to sustain at the same pace.
So I have capped the forward estimate at 7.5% per annum.
1.4 Share Price Growth Summary
| REIT | Weighted Historical Growth | After 30% Conservative Discount | Assumed Forward Growth |
|---|---|---|---|
| – Embassy | 9.09% | 7% | 7.0% per annum |
| – Mindspace | 11.02% | 8% | 8.0% per annum |
| – Brookfield | 17.81% | 12.46% | 7.5% per annum |
| Physical Property (reference) | — | 6.5% per annum |
Step 2: Estimating Dividend Yield
For physical property, I assumed a 3% gross rental yield.
For REITs, I derived the forward dividend yield from actual payout data and OCF analysis.
REITs in India are required to distribute at least 90% of their net distributable cash flows to unitholders.
So the dividend yield is directly linked to the OCF the REIT generates.
2.1 Embassy Office Parks REIT
Units outstanding = Net Worth / Face Value
= Rs. 28,826 crore / Face Value Rs. 300 = 96.09 crore units
| Year | Dividend Paid (Rs. Cr) | Div Per Unit (Rs.) |
|---|---|---|
| FY21 | 2,094.85 | 21.80 |
| FY22 | 2,024.70 | 21.07 |
| FY23 | 2,058.83 | 21.43 |
| FY24 | 2,137.50 | 22.25 |
| Average | — | 21.64 |
The dividend per unit has grown at only 0.67% per year historically. However, the OCF has been growing at 13.27% CAGR.
The payout ratio against OCF has been consistently around 80-85%.
FY25 OCF = Rs. 3,079 crore.
Applying 83% payout ratio → estimated dividend = Rs. 2,556 crore → Rs. 26.60 per unit
At the current price of Rs. 435.21, this gives a yield of 6.11% → I have assumed 6% per annum.
2.2 Mindspace Business Parks REIT
Units outstanding (FY25) = Net Worth / Face Value
= Rs. 16,582 crore ÷ ₹275 = 60.30 crore units
| Year | Dividend Paid (Rs. Cr) | Div Per Unit (Rs.) |
|---|---|---|
| FY21 | 0 | 0 |
| FY22 | 0 | 0 |
| FY23 | 0 | 0 |
| FY24 | 888.34 | 14.73 |
| Average | — | 21.64 |
FY25 dividend = Rs. 888.34 crore = Rs. 14.73 per unit.
This is a yield of 3.17% on the current price. It is low because this was a conservative payout year.
Cross-check using NOPPS:
- FY26 NOPPS = Rs. 47.26.
- Applying 60% payout = Rs. 28.36 per unit
- Yield = 6.10%
Cross-check using OCF:
- FY26 OCF = Rs. 2,413 crore.
- Applying 60% payout = Rs. 21.28 per unit.
- As payout ratios normalise toward REIT industry norms, the yield will move upward. I have assumed 6% per annum.
2.3 Brookfield India Real Estate Trust
Units outstanding (FY25) = Net Worth / Face Value
= Rs. 15,110 crore ÷ Rs. 300 = 50.37 crore units
| Year | Dividend (Rs. Cr) | Units (Cr) | Div/Unit (Rs.) | Payout on OCF |
|---|---|---|---|---|
| FY22 | 376.35 | 29.96 | 12.56 | 62.1% |
| FY23 | 349.16 | 28.85 | 12.10 | 37.9% |
| FY24 | 355.35 | 36.37 | 9.77 | 24.8% |
| FY25 | 482.17 | 50.37 | 9.57 | 26.1% |
The payout ratio dropped sharply in FY23 and FY24 because Brookfield was actively acquiring new properties and retaining cash for expansion.
As growth stabilises, the payout ratio is expected to rise back toward 55-60%.
Cross-check using OCF:
- FY25 OCF = Rs. 1,847 crore.
- Applying 55% payout = ₹20.18 per unit
- Yield = 6.32%
Given that Brookfield is the fastest growing of the three, with the most room to increase distributions, I have assumed 7% per annum.
Dividend Yield Summary
| REIT | Dividend Yield Assumed | Dividend Growth Assumed |
|---|---|---|
| Embassy | 6% per annum | 5% per annum |
| Mindspace | 6% per annum | 6% per annum |
| Brookfield | 7% per annum | 7% per annum |
| Physical Property (reference) | 3% gross rental yield | 5% per annum |
One important point here.
The 3% rental yield for physical property is gross. It is before property tax (35% of rent), annual maintenance (20% of rent), and society charges (10% of rent). After these deductions, the net yield on physical property is closer to 1 to 1.5% per annum.
REIT distributions, on the other hand, are net income to the investor.
All property management costs, maintenance, and taxes are borne by the REIT company.
So the 6-7% yield I have assumed for REITs is directly comparable to the net yield, it is not the gross yield of a physical property.
Step 3: Cash Flow Model and XIRR
The methodology is exactly the same as the physical property analysis.
The person invests Rs. 1 crore on 1 December 2025.
REITs pay quarterly distributions. After 10 years, on 1 January 2036, all REIT units are liquidated at the appreciated price.
3.1 Embassy REIT — Cash Flow Summary
Assumptions: 7% price growth | 6% dividend yield | 5% dividend growth
| Year | Annual Distribution (Rs.) | Quarterly Distribution (Rs.) |
|---|---|---|
| 1 | 6,00,000 | 1,50,000 |
| 2 | 6,30,000 | 1,57,500 |
| 3 | 6,61,500 | 1,65,375 |
| 4 | 6,94,575 | 1,73,644 |
| 5 | 7,29,304 | 1,82,326 |
| 6 | 7,65,769 | 1,91,442 |
| 7 | 8,04,057 | 2,01,014 |
| 8 | 8,44,260 | 2,11,065 |
| 9 | 8,86,473 | 2,21,618 |
| 10 | 9,30,797 | 2,32,699 |
| 75,46,735 |
| Summary | Growth Rate | Amount |
|---|---|---|
| Initial Investment (1 Dec 2025) | N/A | – ₹1,00,00,000 |
| Total Distributions over 10 years (@6% Dividend yield) | Div Growth 5% | + ₹75,46,736 |
| Liquidation Value (1 Jan 2036) | Price Growth 7% | + ₹1,96,71,514 |
| Total Corpus | ₹2,72,18,249 (Rs. 2.72 crores) | |
| XIRR | 12.73% per annum |
3.2 Mindspace REIT — Cash Flow Summary
Assumptions: 8% price growth | 6% dividend yield | 6% dividend growth
| Year | Annual Distribution (Rs.) | Quarterly Distribution (Rs.) |
|---|---|---|
| 1 | 6,00,000 | 1,50,000 |
| 2 | 6,36,000 | 1,59,000 |
| 3 | 6,74,160 | 1,68,540 |
| 4 | 7,14,610 | 1,78,652 |
| 5 | 7,57,486 | 1,89,372 |
| 6 | 8,02,935 | 2,00,734 |
| 7 | 8,51,111 | 2,12,778 |
| 8 | 9,02,178 | 2,25,545 |
| 9 | 9,56,309 | 2,39,077 |
| 10 | 10,13,687 | 2,53,422 |
| 79,08,477 |
| Summary | Growth Rate | Amount |
|---|---|---|
| Initial Investment (1 Dec 2025) | N/A | -₹1,00,00,000 |
| Total Distributions over 10 years (@6% Dividend Yield) | Div Growth 6% | +₹79,08,477 |
| Liquidation Value (1 Jan 2036) | Price Growth 8% | +₹2,15,89,250 |
| Total Corpus | ₹2,94,97,727 (Rs. 2.95 crores) | |
| XIRR | 13.75% per annum |
3.3 Brookfield REIT — Cash Flow Summary
Assumptions: 7.5% price growth | 7% dividend yield | 7% dividend growth
| Year | Annual Distribution (Rs.) | Quarterly Distribution (Rs.) |
|---|---|---|
| 1 | 7,00,000 | 1,75,000 |
| 2 | 7,49,000 | 1,87,250 |
| 3 | 8,01,430 | 2,00,358 |
| 4 | 8,57,530 | 2,14,383 |
| 5 | 9,17,557 | 2,29,389 |
| 6 | 9,81,786 | 2,45,447 |
| 7 | 10,50,511 | 2,62,628 |
| 8 | 11,24,047 | 2,81,012 |
| 9 | 12,02,730 | 3,00,683 |
| 10 | 12,86,921 | 3,21,730 |
| 96,71,512 |
| Summary | Growth Rate | Amount |
|---|---|---|
| Initial Investment (1 Dec 2025) | N/A | -₹1,00,00,000 |
| Total Distributions over 10 years (@7% Dividend Yield) | Div Growth 7% | +₹96,71,514 |
| Liquidation Value (1 Jan 2036) | Price Growth 7.5% | +₹2,06,10,316 |
| Total Corpus | ₹3,02,81,829 (Rs. 3.03 crores) | |
| XIRR | 14.64% per annum |
The Final Comparison
| Option | Final Corpus | XIRR |
|---|---|---|
| Option 1: Self-Funded Property | Rs. 2.76 crores | 10.56% |
| Option 2: Home Loan Route | Rs. 2.45 crores | 13.20% |
| Option 3a: Embassy REIT | Rs. 2.72 crores | 12.73% |
| Option 3b: Mindspace REIT | Rs. 2.95 crores | 13.75% |
| Option 3c: Brookfield REIT | Rs. 3.03 crores | 14.64% |
What Do These Numbers Tell Us?
First, Embassy REIT almost exactly matches the self-funded physical property in absolute corpus — Rs. 2.72 crores vs Rs. 2.76 crores. But its XIRR of 12.73% is significantly higher than 10.56%. The reason is the same one I explained in my earlier post: XIRR rewards efficient capital deployment, and a 6% quarterly distribution starting from Day 1 is far more efficient than a net rental yield of 1-1.5% after costs.
Second, Mindspace REIT beats the home loan route on both counts. It is yielding a higher corpus (Rs. 2.95 crores vs Rs. 2.45 crores) and a higher XIRR (13.75% vs 13.20%). This is a meaningful result.
Third, Brookfield REIT gives the highest XIRR of 14.64% and the highest corpus of Rs. 3.03 crores. However, these numbers come with a caveat. Brookfield is the youngest and fastest-growing of the three. Its high historical growth was partly acquisition-driven – tangible assets nearly doubled between FY23 and FY24. Whether that pace of growth will continue is uncertain. I have already applied a significant conservatism discount, but the inherent uncertainty is higher here compared to Embassy or Mindspace.
Fourth, and this is worth stating clearly. The physical property investor in our model also had to pay property tax (35% of rent annually), maintenance costs (20% of rent annually), and society charges (10% of rent monthly). None of these costs exist for a REIT investor.
If we were to strip out these costs from the physical property model and redirect them as additional investment, the gap between physical property and REITs would narrow further. But the direction of the result would remain the same.
Which REIT Is Best for a Long-Term Investor?
Based purely on the numbers from this analysis, here is my assessment:
- Embassy REIT is the most mature and stable of the three.
- Revenue has grown at 10.69% CAGR over 4 years.
- OCF has grown at 13.27% CAGR.
- The distribution history is consistent across 4 years. For an investor who prioritises stability and predictability over maximum returns, Embassy is the most dependable option.
- Mindspace REIT offers the best combination of growth and stability.
- Revenue CAGR of 16.26%,
- OCF CAGR of 20.11%, and
- Improving operating margins — from 67.59% in FY23 to 75.79% in FY26.
- On a risk-adjusted basis, the XIRR of 13.75% and corpus of Rs. 2.95 crores makes Mindspace the most attractive option in this analysis.
- Brookfield REIT has the highest projected return but also the highest uncertainty. Its numbers are impressive.
- OCF grew at 45% CAGR over 3 years, but it is still in an early growth phase.
- The payout ratio dropped from 62.1% in FY22 to just 26.1% in FY25, meaning a large portion of earnings is being retained for expansion.
- As it matures and payout ratios normalise, returns should improve further. It is a higher-risk, higher-reward option compared to the other two.
My Conclusion
These are projections, not guarantees. I’m just trying to make a calculated guess.
The XIRR numbers I have calculated are based on assumptions derived from historical financial data. Actual future returns will depend on how India’s commercial real estate market evolves, interest rate movements, occupancy trends, and each REIT’s individual execution.
That said, the data does point in a clear direction.
REITs, when evaluated on the same Rs. 1 crore, 10-year framework as physical property, compare very favourably. In the case of Mindspace and Brookfield, they come out ahead on both XIRR and absolute corpus.
For someone who has a passion for real estate investing but wants the simplicity of stock market investing, no tenant calls, no maintenance, no registration charges, no stamp duty, full liquidity, REITs are worth a serious look.
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Have a happy investing.
