REITs Set to Attract Investment Worth Rs. 90,000 Crore
The year 2014 looks promising for REITs or Real Estate Investment Trusts. Anticipating a go ahead in this year’s budget, the trusts offer hope to realty developers who are struggling with low sales and high fund costs.
Like mutual funds, REITs can be traded and listed in exchanges. They are tax-free and invest in malls, offices, and other income-generating assets. The income generated serves as dividends. The associate director of real estate practice in E & Y, Maadhav Poddar, predicts that the initial year could generate investments that could go as high as Rs. 60,000 to 90,000 crore. He also says that FDI (foreign direct investment) and FPI (foreign portfolio investment) should be allowed in REITs, and the government should waive stamp duty when buying and selling properties.
Big names in the real estate sector, like Phoenix Mills, Prestige, DLF, K Raheja Corp, and Embassy have a huge portfolio of assets that are leased, and will reap the benefits of this surge. REITs are expected to improve liquidity in the real estate industry, since property developers can sell big assets and lease them back to pay back their loans. A lack of liquid money is a common problem in this sector.
Investors, regulators, and developers are more concerned about the government’s opinion on the tax aspect of REITs. Rajiv Talwar, DLF’s executive director, says that the laws that accompany these trusts are vital to the future of REITs. Phoenix Mills’ MD, Atul Ruia is of the opinion that REITs should get tax exemptions. Chairman of SEBI, U. K. Sinha said that tax breaks are important for the trusts to become popular.
Source: Business Standard
Chairman of SEBI- U. K. Sinha, FDI, FDI (foreign direct investment), fpi, FPI (foreign portfolio investment), Real Estate Investment Trusts, REIT, REITS, SEBI, sebi guidelines, Securities and Exchange Board of India, tax-free
