JOIN USThe 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.
Capital market watchdog Sebi during its board meeting on Sunday approved regulations for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
Describing the approval as very good news for the realty sector, real estate services major Jones Lang LaSaelle India Chairman and Country Head Anuj Puri 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,” Puri said.
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," Bansal, Partner and Head of Real Estate and Construction at KPMG India said.
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,” Neeraj Sharma, Partner at Walker Chandiok & Co LLP said.
According to 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 REITs markets globally.