^..Echoes..^

Sebi’s ap­proval to REITs will ben­e­fit the Real Es­tate In­vest­ment

Accommodation Times - - Nation -

Mr. Anuj Puri, Chair­man & Coun­try Head, JLL In­dia

With the stamp of ap­proval by SEBI, REITs is 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. Cur­rently, Grade A of­fice space in the top seven cities of In­dia amounts to around 376 mil­lion square feet, and we an­tic­i­pate that ap­prox­i­mately 50% of this space will get listed in next 2–3 years. The val­u­a­tion of th­ese as­sets is around $10-12 bil­lion, and this ac­counts for a fairly mas­sive in­flux of fund­ing wait­ing in the wings to hit the In­dian real es­tate mar­ket via REITs over the next few years.

Mr. 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. A suc­cess­ful In­dia REIT mar­ket will re­quire strong sup­port from ex­ist­ing land­lords and in­vestors, as well as fa­vor­able mar­ket con­di­tions. All in all, the es­tab­lish­ment of the REIT mar­ket in In­dia is still at a very nascent stage; and suc­cess­ful im­ple­men­ta­tion and devel­op­ment will rest on a num­ber of fac­tors re­lated to the reg­u­la­tory en­vi­ron­ment, mar­ket con­di­tions and is­suers/in­vestors.

Mr. Bhairav Dalal, As­so­ciate Direc­tor, PwC.

If REITS (Real Es­tate and In­fra­struc­ture In­vest­ment Trusts) are al­lowed to in­vest in LLPs hold­ing real es­tate, spon­sors might con­tem­plate set­ting up LLPs for Reits. This would pro­vide slightly higher re­turns to in­vestors, since div­i­dend dis­tri­bu­tion tax is not ap­pli­ca­ble to profit dis­tri­bu­tions made by LLPs.

Mr. Shishir Bai­jal, Chair­man & MD, Knight Frank In­dia

The move by SEBI to is­sue guide­lines for REITs is laud­able as this would bring in pos­i­tive sen­ti­ments and clear con­fu­sion in cash strapped Real Es­tate. REITs specif­i­cally will prove to be effective tool for en­hanc­ing in­vest­ments into the com­mer­cial real es­tate. REITs only look at com­pleted in­come gen­er­at­ing pro­jects so risks are min­i­mum for in­vestors.

Mr. Sachin Sand­hir, MD, RICS South Asia

The move by SEBI to is­sue guide­lines for REITs is laud­able as this would bring in pos­i­tive sen­ti­ments and clear con­fu­sion in cash strapped real es­tate sec­tor. REITs specif­i­cally will prove to be effective tool for en­hanc­ing in­vest­ments into the com­mer­cial real es­tate. REITs only look at com­pleted in­come gen­er­at­ing pro­jects so risks are min­i­mum for in­vestors.

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