Experts expect investments worth $ 10 Billion via REIT route this fiscal
Real Estate Investment Trusts (REITs) are expected to raise a whopping $10 billion this fiscal itself after it was launched in the maiden budget presented on July 10. They are expected to provide relief to the real estate industry which has been reeling under the liquidity crunch for the last few years.
REITs would get a pass- through entity status and other incentives like exemption from long-term capital gains tax. The Managing Director of Hiranandani Group, Niranjan Hiranandani stated that REITs are subject to all the regulation by SEBI (Securities and Exchange Board of India) and the concessions by the state governments are yet to be put in place, and are expected to bring in about $10 billion by March 2015.
An analyst at India Ratings stated that REITs are an attractive mode of investment as they are exempted from the long term capital gains tax, and thus will allow channelising of funds from retail investors to the sector. They would also provide diversification benefit to real estate investors.
REITs will mop in long-term finance from foreign as well as domestic sources, and hence the pressure on the banks for lending money for real estate and infrastructure projects will be reduced. Though this route the developers will get access to cheaper funds compared to the debts from the banks.
Apex Multicons’ chairman Anant Pandit and Ernst & Young India tax partner Gaurav Karnik welcomed the move and when asked about the quantum funds that may flow into the market, Pandit stated that it is too early to assess as SEBI has to notify the final regulations.
Source- Financial Chronicle
Ernst & Young, Ernst and Young, Real Estate Investment Trusts, SEBI, Sebi regulations, Security and Exchange Board of India (SEBI)
