Sebi to permit REITs in India, issues draft guidelines

After having shelved the initial guidelines for REITs in 2008, the markets watchdog has decided to revive the plan in a bid to save the ailing real estate sector

GN Bureau | October 11, 2013



India’s real estate sector is neck deep in crisis with delays in completion of projects, demand having slowed down and interest rates remaining high. In order to add depth to the country’s real estate market, the securities and exchange bureau of India (Sebi) is looking to permit real estate investment trusts (REITs). The move is aimed at attracting money into the sector which has been experiencing a liquidity crunch for some time now.

After having shelved the initial guidelines for REITs in 2008, the markets watchdog has decided to revive the plan as it released a consultative paper, on Thursday, inviting comments from the public by October 31.

REITs sell like stocks on major exchanges and invest directly in completed real estate projects instead of those projects under-construction. In this way, investors can earn regular income through the rent received from the properties.

According to the consultative paper released by Sebi, REITs are a win-win for both real estate developers and investors. "On one hand, REITs provide the investors with an investment avenue, which is comparatively less risky than investing in under-construction properties and provides regular income. On the other hand, REITs provide the sponsor (usually a developer or a private equity fund) avenues of exit thus providing liquidity and enable them to invest in other projects," it said in the paper.

Besides other factors, Sebi also said that REITs bring in transparency and accountability in the real estate sector thus making it a popular choice across the globe.

Explaining the entire framework, the regulator has pointed that REITs will be set up as trusts and cannot launch any schemes.  Upon being registered with Sebi, REITs may go in for an initial public offer (IPO) of minimum Rs 250 crore. Once listed with a stock exchange, it can go in for follow-on public offers (FPOs), Sebi said.

The markets watchdog is likely to announce formal guidelines for REITs after taking into account the feedback it receives from the public.
 

Comments

 

Other News

On a personal note: DIVINE

An underground rapper who grew up on Mumbai streets, Divine spins his music around his environment and poverty. His breakout single, ‘Meri Gully Mein’, along with fellow rapper Naezy caught Bollywood’s attention. The Hindi film ‘Gully Boy’ is inspired by their lives and gr

The role model for an IAS officer

Anil Swarup, an IAS officer of Uttar Pradesh cadre who retired in 2018, is a model bureaucrat who retained his optimism right till the end of service and exemplified dedication and commitment. His excitement at the opportunities that a job in the IAS provided is evident on every page of his new book publis

Reform of the civil services: At home and away

The question of reform of the civil services has been debated extensively at all levels at least over the last five to six decades after independence. Indeed, it was soon perceived that the Indian Administrative Service (IAS) may not be well equipped to deal with the problems of an emerging developing coun

The greatest challenge for any government

Shouting vengeance at all and sundry while wriggling out of holes of our own making seems to be our very special national characteristic. Some recent instances are illustrative of this attribute. A number of business tycoons with thousands of crores of unresolved debts have fled abroad with the government

The mysterious case of CBI’s legality

The Central Bureau of Investigation (CBI) came into existence, based on a Resolution of the home ministry, dated April 1, 1963 – a sheer coincidence that it also happens to be April Fool’s day. Over the past few months, we have seen the CBI live up to its founding day with great zeal, being i

The Evolution of Modi

Gujarat was passing through a turbulent phase in the 1980s. The decade began middle class agitations against new reservation policies, and the caste friction turned communal under the watch of chief minister Madhavsinh Solanki, alienating majority of urban population on both counts. The ground was ripe for

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter