New Delhi: New norms for setting up of real estate and infrastructure investment trusts will help attract more foreign investors to these key sectors and facilitate inflows worth $15-20 billion from domestic and overseas sources, according to industry experts and officials.
During its board meeting held on Sunday, the Securities and Exchange Board of India (Sebi) approved regulations for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). (Read full story)
Describing the approval as very good news for the realty sector, Anuj Puri, India chairman and country head at real estate services major Jones Lang LaSaelle, said that up to $10 billion is expected to be raised through REITs in the next five years.
“We will definitely see foreign investors investing in Indian real estate. It will also help developers in raising fresh equity from stock markets, which has been closed for last few years.”
“About $8-10 billion is expected to be raised through REITs over the next five years,” Mr Puri told PTI.
Welcoming Sebi’s move, KPMG India’s Neeraj Bansal said the regulations have been cleared within a month of Budget announcement.
“Post Sebi approval, expediting of notification of REIT and InvIT norms will facilitate infusion of an estimated $15-20 billion in the sector, and an alternate to bank finances,” said Mr Bansal, partner and head of realty and construction at KPMG India.
With amendments and other corresponding regulations, both foreign and domestic institutions and other investors would be eligible to invest in these trusts, he said,
It would also provide liquidity to investors as these trusts would be listed and traded on stock exchanges, he added.
“Changes suggested by Sebi in the final REITs guidelines are definitely encouraging, particularly the two developments are noteworthy – requirements of minimum asset size has been halved and allowing foreign investments in REITs,” said Neeraj Sharma, partner at Walker Chandiok & Co LLP.
According to Mr Sharma, reduction in the asset size to Rs. 500 crore for REITs would attract more rent yielding assets under the fold of this vehicle.
Besides these, trusts would attract pension funds and insurance companies, which have been proved as a catalyst of REIT markets globally.
Real estate industry grouping Credai’s president-elect, Geetamber Anand, also welcomed the Sebi decision.
“It is a good news. We welcome it as it will give fresh liquidity to the sector and will enable many organisations that were into commercial real estate leading to reduce debt,” he said.
Industry body Naredco’s chairman, Naveen Raheja, said it is good news for the industry.
“Government is moving extremely fast. REITs will help in bringing investment into cash-starved real estate industry.”