Markets watchdog Securities and Exchange Board of India (Sebi) on Friday said it would soon specify norms for creation and listing of Real Estate Investment Trust or REITS to make the realty sector attractive for foreign and domestic investors.
Like mutual funds, REITs and real estate players would pool in money from investors and issue units in exchange. Most of the money collected is then invested in commercial properties which are completed and generate income.
The system of real estate investment trust is more prevalent in developed nations.
The yet to be specified norms would enable listing and trading of REITs as any other security on the stock exchange and also help create new platform for raising of funds by real estate companies.
In his address at a conference organised by industry chamber Assocham here on Friday, Sebi Executive Director Ananta Barua said: “We will soon notify the new norms on Real Estate Investment Trusts or REITs.”
“Sebi has set up two committees that are looking into specifying guidelines for issues and similarly for listing of those units a separate committee has been set up.”
Barua also added that “We are trying to deepen the market and also bringing more investment products so that investment can be channelised to meet the needs of the economy.”
Sebi has fixed the minimum requirement for asset sizes permitted to be listed in India at Rs 500 crore. Earlier there was a minimum requirement of Rs 1,000 crore in this regard.
According to experts, the new instrument has potential of attracting $8-10 billion into the real estate sector.
According to government guidelines these trusts may invest directly in properties or through a special purpose vehicle (SPV). As per the norms, 80 per cent of the value of a REITs shall be invested in completed and revenue-generating assets, and the remaining 20 per cent may be invested in developmental properties and other assets.
In the Budget, Finance Minister Arun Jaitley had announced significant tax incentives for such real estate investment funds.Source:http://www.newindianexpress.com/
Like mutual funds, REITs and real estate players would pool in money from investors and issue units in exchange. Most of the money collected is then invested in commercial properties which are completed and generate income.
The system of real estate investment trust is more prevalent in developed nations.
The yet to be specified norms would enable listing and trading of REITs as any other security on the stock exchange and also help create new platform for raising of funds by real estate companies.
In his address at a conference organised by industry chamber Assocham here on Friday, Sebi Executive Director Ananta Barua said: “We will soon notify the new norms on Real Estate Investment Trusts or REITs.”
“Sebi has set up two committees that are looking into specifying guidelines for issues and similarly for listing of those units a separate committee has been set up.”
Barua also added that “We are trying to deepen the market and also bringing more investment products so that investment can be channelised to meet the needs of the economy.”
Sebi has fixed the minimum requirement for asset sizes permitted to be listed in India at Rs 500 crore. Earlier there was a minimum requirement of Rs 1,000 crore in this regard.
According to experts, the new instrument has potential of attracting $8-10 billion into the real estate sector.
According to government guidelines these trusts may invest directly in properties or through a special purpose vehicle (SPV). As per the norms, 80 per cent of the value of a REITs shall be invested in completed and revenue-generating assets, and the remaining 20 per cent may be invested in developmental properties and other assets.
In the Budget, Finance Minister Arun Jaitley had announced significant tax incentives for such real estate investment funds.Source:http://www.newindianexpress.com/
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