REITs- the favoured investment tool in the west is all set to take the Indian market by storm
REITs will offer financing as well as exit options to the developers and investors. It is expected that REITs will bring a lot of action in the real estate market. The go-ahead to the real estate investment trust by the Securities and Exchange Board of India (SEBI) will enhance the depth of the country’s commercial market.
SEBI’s spokesperson stated that the real estate investment trust was proposed about 12 years ago by SEBI. Now it has come into effect. The reason for the delay was due to the fact that at that time the country didn’t have enough A grade properties to get listed. So SEBI did not give its approval to the proposal.
The SEBI’s nod will help the developers focusing on the commercial real estate in raising funds. For enhancing investments in the commercial real estate, it is expected that the real estate investment trust will prove as an effective tool. It is also mentioned in the guidelines for SEBI that real estate investment trust will only look at completed and income-generating projects.
SEBI feels that it is very important for them to safeguard the interests of the investors and since the REITs will only look at completed and income-generating projects, risks are minimum for the investors. The REIT is a de-risked asset and has the potential to raise around $10 billion every year.
This will give the required boost to the ailing real estate industry. Overseas, people love to invest in REITs. In India too common man will get a new investment platform.
Source- Financial Chronicle
guidelines for SEBI, real estate investment trust, REITS, SEBI, Securities and Exchange Board of India
