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Our realty experts weigh the pros and cons of REITs and discuss ways through which they could further impact the realty market. The timing couldn’t be more perfect as the country awaits its first REIT listing to go live. Read on…

Real Estate Investment Trust (REIT) has been a long pending demand of the Indian real estate sector, as it is one of the legitimate ways to bolster institutional funding. 

Thus, global and domestic investors are optimistic about their prospects.

REITs in India: a beginning

The Securities and Exchange Board of India (SEBI) had proposed a regulatory framework for REITs on October 10, 2013, under the REIT Regulations, 2013. However, no single REIT has been listed in the country. According to real estate experts, there were serval roadblocks for REITs in India. However, last year’s budget addressed many of these queries.

And finally, this year, the country’s maiden listing under REITs is expected in the first quarter of 2018.

What are REITs?

REITs are listed on stock exchange, just like the mutual funds;

Smaller investors who cannot invest in realty assets can invest here;

The stockholders of a REIT earn a share of the income produced through real estate investment;

Listed REITs provide liquidity, thus providing easy exit to the investors.

The potential of REITs in India

It will trigger foreign investment and provide a new asset class for investors;

REITs would allow retail investors to place funds relatively safely in the country’s real estate market;

REITs are expected to create a Rs 1.25 trillion opportunity;

According to a RICS and Cushman & Wakefield report, Indian commercial real estate offers investment opportunity worth $43-54 billion across the top eight cities; REITable assets may cover completed and rent generating real estate assets. It is estimated that approximately $ 121 billion or 1.73 billion sq ft occupied by CRE (Commercial Real Estate) across office, retail and warehouse segments could potentially benefit from the REIT, says Knight Frank India report.