PRICOL PROPERTIES LIMITED

Aug 10, 2014

The 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 USD 15-20 billion from domestic and overseas sources, according to industry experts and officials.

Capital market watchdog Sebi during its board meeting today 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 USD 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 USD 8-10 billion is expected to be raised through REITs over the next five years,” 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 USD 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 – a requirement 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.

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 organizations that were into commercial real estate leading to reduce debt,” he said.

Industry body NAREDCO 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,” he said.

Norms on Reits, Infrastructure Investment Trusts a Welcome Step