Wednesday, 17 September 2014

REIT in India: Is it the right time?

Good news for the cash-strapped real estate and infrastructure industry. The capital market regulator Securities and Exchange Board of India (Sebi) has just approved the final guideline for real estate investment trusts (REIT) and infrastructure investment trusts (InvIT).

The twin move will give the real estate and the infrastructure sector easier access to funds and create new options for investors to invest. SEBI’s approval for setting up of REITs is a timely move for the real estate sector as REITs have globally proved to be an efficient way of raising capital for the sector and providing an easy exit route to investors, also they can be well accepted by investors and provide better returns than other asset class.
In simple terms, REITs will channelize investments from wealthy individuals and institutions to the real estate sector through units sold by REITs. Like mutual funds collecting money from investors and investing in company shares and other financial instruments, REITs will invest money in the real estate industry. Experts believe that $10-$15 billion worth of investment will be infused into the real estate industry through REITs in a couple of years.

Political stability and the recent policy related initiatives have encouraged global investors who refrained before from entering the Indian market due to political, policy, governance and infrastructure-related issues to look towards India again for business activities. Therefore, it is indeed the right time to introduce REIT in Indian market as it will shore up liquidity in the sector and emerge as an alternate to bank finance. 
- Mr Mohit Goel, CEO Omaxe

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