REIT is an attractive product for moderate investors
Individual investors can include real estate investment trusts in their investment portfolios because of the moderate risks involved compared to other assets
The Union Budget 2016-17 was a mixed bag for the real estate sector. The reforms announced i n t he budget were largely directed to support the supply side of the real estate sector, while the demand side was offered limited incentives. Overall, various reforms such as removal of Dividend Distribution Tax ( DDT) on Real Estate Investment Trusts ( REITs) Special Purpose Vehicle (SPV), direct and indirect tax benefits to affordable housing, tax incentives to first time home borrowers etc are expected to support the sector growth.
In our view, the most prominent announcement was the removal of DDT, which was earlier applicable on payment of dividends by a REIT SPV.
The DDT issue was the only major roadblock in successful take-off of REITs in India and with its removal, we may witness listing the first REITs later in the year or early next year. It is estimated that in India has potential for listing of about about 200- 250 million sq ft of REITable assets worth US$3540 billion and close to half of