The Securities and Exchange Board of India (SEBI) approved the setting up of real estate INVESTMENT trusts (REITs), a move that may offer a new source of financing to India's cash-strapped property developers.
Anuj Puri, chairman & country head, JLL India - With the stamp of approval by SEBI, REITs are finally a formalized concept. This is a big change from the ambiguity and uncertainty that prevailed about this very important instrument in previous years. It is gratifying to note that SEBI fully intends to deliver on its assurances of bringing better and faster FUNDING into Indian real estate.
As the drafts for REITs stands now, further clarity about taxation eligibility norms is definitely required, and will doubtlessly come before the first listing goes up. When this happens, there will be vastly increased interest from foreign investors.
Anshuman Magazine, chairman & MD, CBRE South Asia Pvt. Ltd. – This move is a positive signal for India’s capital markets as a whole, and the realty sector in particular. Reducing the minimum requirement for commercial real estate asset sizes permitted to be listed in India REITs from Rs 1,000 crore to Rs 500 crore is likely to generate more income through this new FUNDING channel and encourage many mid-sized development firms to consider this avenue. Having said that, although the government has already clarified that India REITs will be given 'pass through taxation status', clarifying the tax structure is of high importance at the moment.
Anant Pandit, CEO, Apex Multicons- REIT currently looks at only commercial projects and I would have appreciated if residential space could have also benefited from REIT, where there are consistent returns for investors. REITS will help to mobilize funds in real estate industry and probably infuse the much required confidence in the space but time will show how it evolves with respect to this new INVESTMENT platform. We are also waiting for more detailed information regarding the functioning of REIT in India. The common man I believe needs to wait for a new investment platform to invest.”
Rajesh Prajapati, MD Prajapati Constructions Ltd – The quick approval of REIT (Real Estate and Infrastructure Investment Trusts), guidelines by SEBI is an industry friendly move that will attract Increased FUNDING to the sector and thus help timely completion of real estate projects. The reduction of minimum requirement for commercial real estate asset sizes under REITs from Rs.1,000 crore to Rs.500 crore.Will undoubtedly boost construction activity in areas such as Navi Mumbai, which will encourage mid-sized developers to consider looking at this source.
Stating that FUNDING plays a very important role in the development of new cities like Navi Mumbai, he expressed the hope that upcoming nodes like Dronagiri in Navi Mumbai will witness renewed construction as the neighborhood sees massive development like the new international airport, Mumbai Trans Harboiur Link and expansion of JNPT facilities.