Skip to main content

Real Estate Investment Trusts (REITs) in India

 

Regulator SEBI Not Keen On REITs Since Realty Market Lacks Depth & Liquidity


   CAPITAL market regulator the Securities and Exchange Board of India (Sebi) may drop its plan to introduce real estate investment trusts (REITs) in India. The regulator had issued draft guidelines for REITs a couple of years ago, but never finalised them.


   According to a person familiar with the development, the regulator feels having both real estate mutual funds and real estate investment trusts could confuse investors. It also feels that the REIT guidelines may not be suitable for a country like India, where the property market is lacking in depth and liquidity. Having REITs along with REMFs will create confusion among users; withdrawing draft guidelines may be the right thing.


   REITs operate on the principle of a mutual fund. Just like mutual funds collect money from investors and deploy it into equities and bonds, REITs deploy investors' money into real estate assets. These trusts invest mainly in commercial property and pay the rent collected from properties to shareholders as dividend. REIT investment returns in Asia are about 6-12%, higher than the yields on government bonds. REITs in Japan, Hong Kong and Singapore offer dividend yields that are over 5% higher than 10-year government bonds.

 
   Even in the case of real estate mutual funds (REMFs), the rules for which were notified in May 2008, the regulator has held back permission to some entities, according to industry circles.


   The Association of Mutual Funds in India (Amfi) set up the Satwalekar Committee to study the introduction of Real Estate Mutual Funds (REMFs), which submitted its report in October 2000. A sub-committee was further set up by Amfi whose recommendations were approved by Sebi in 2006. Due to residual issues like valuation, accounting, maturity of the scheme and investment restrictions, the REMF regulations, although approved earlier, were notified only on April 16, 2008.


   Both are good alternative investment options. With the correct set of regulatory oversight, these could be good instruments for investors to diversify their portfolio.


   As a product, REITs originated in the US and became popular in many countries across the globe. Many private equity investors in real estate projects in India were eagerly waiting for the REITs and REMFs to take off, so that they could get an exit option once their investments mature.


   In the financial sector, more the options, better it is for investors. I don't think that both products are similar in nature. REITs have been successful and there is no reason why they would not co-exist with REMFs; it is up to investors to choose.


   The proposed REIT model in India has the same concept as the REMF model, that of sponsor, trustee company and the asset management company. However, the application for grant of certificate of registration for REITs has to be made by the real estate investment trust and real estate investment management company, separately. According to the person quoted above, REITs, in the Indian context, are more like REMF — very different from REITs prevalent in the West.

 


Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...

Perpetual SIP - Its Advantages

Retail investors have taken a fancy to investing in mutual funds through systematic investment plans (SIPs). As per industry estimates, Rs 4,000 crore flows into SIPs every month. One way to take advantage of SIPs in a true long-term manner is to opt for a perpetual SIP 1. What is a perpetual SIP? In an SIP , you make periodic investments in a mutual fund scheme of your choice generally every month for a pre defined tenure. While signing up an SIP mandate , you have the option to leave the end-date column blank. If the column is blank, it means the investor has opted for a perpetual SIP . Most fund houses assume this SIP will continue till December 2099 unless you give a written communication to stop it. However, some fund houses require you to tick the `perpetual option'. 2. What are the advantages of perpetual SIPs? Registering an SIP involves a lot of paperwork and it takes time. It is observed that many investors skip their SIP instalments when they go for short-tenure option...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now