Monday, 14 October 2013

Listing of realty investments trusts to get better liquidity industry body

indian realty investments
Listing of realty asset trusts to get better liquidity: industry body

Market regulator Securities and replace Board of India's (Sebi) proposal to permit listing of real estate investment trusts (REITs) is a affirmative step and will help get better liquidity position of developers, industry body Credai has said.

It also whispered that it would soon submit suggestion on Sebi's draft guidelines on REITs released on Thursday.

Stimulating a five-year old proposal, Sebi issued draft norms for REITs, a well-liked investment vehicle in many parts of the world. It is similar to common funds except that investments would be on real estate assets that produce rental income.

In a declaration released late on Friday, Credai chairman Lalit Kumar Jain welcomed the "much awaited move" on allowing REITs in India.

"REIT will definitely be a optimistic step for the sector since liquidity position of developers could increase," he said.

REITs will also result in increased inflow of foreign funds for the sector, which is "struggling" for funds in view of the RBI restrictions and negative weightage given to real estate, he added.

Mr Jain, however, called for some clearness on taxation issues around the instrument from the finance ministry.

"Credai will soon submit developers' viewpoint to Sebi," he said. Sebi has asked stakeholders to give their comments on the draft guidelines by end of this month.

Looking to draw more real estate investors into the capital market, Sebi has proposed listing of REITs saying the evolution of such investment vehicles is "crucial" for the quickly growing real estate industry.

REITs would be allowed to list on stock exchanges through early public offer (IPO) and can raise funds further through Follow-On Offer.

Sebi's decision to revitalize the proposal to allow REITs after five years gives a strong signal that the regulator is going to ope-rationalize the REITs market in India on high priority basis, said Samantak Das, chief economist and director of research of property consultant Knight Frank India.

"This is a very positive move which will improve the depth of the country's real estate market and will give financing and exit options to developers on one hand and avenues for investors on the other," he said.

"The timing of this move is also very significant keeping in mind the prevailing paucity of funds coupled with the ongoing slowdown in the economic growth."

REITs, once implemented, would revive substantial investor interest from domestic and global investors in India's currently subdued real estate markets, said Sanjay Dutt, executive managing director of South Asia at Cushman & Wakefield.

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