Hailing the SEBI's notification on Real Estate Investment Trusts (REITs), developers and property consultants today said the move is expected to help generate investment for the sector from domestic and global funds.
Industry body CREDAI, however, demanded that government should remove capital gain tax and dividend distribution tax on transactions under REIT to make this instrument attractive.
Sebi today notified norms for listing of business trust structures, REITs and InvITs, that would help attract more funds in a transparent manner into realty and infrastructure.
REITs, to be listed on stock exchange, offer investors an opportunity to invest in a portfolio of income-generating real estate or related assets.
"It's a good decision at a time when the Prime Minister is visiting the US. This is a good signal to US investors who can look at India positively," Credai Chairman Lalit Jain said.
Commenting on the development, CBRE South Asia Chairman & Managing Director Anshuman Magazine termed it as a fantastic step by the SEBI and the government.
"Both REITs and InvITs have potential to bring USD 50 billion over the next few years. However, I hope the government look at the tax issues raised by the industry to enable formation of REITs and InvITs," Magazine said.
Magazine said the issue of capital gain tax and dividend distribution tax on these two structures needs to be resolved.
Global property consultant JLL India Chairman & Country Head Anuj Puri said the REIT would be able to address a major concern of the industry related to liquidity.
"REITs will render the entire real estate funding process more institutionalised, and therefore transparent. This is a big positive, and we look forward to Indian real estate attracting a sizeable amount of investments...," Puri said.
Listing out benefits of REITs, JLL India said that for developers, the trust bring the benefits of liquidity and faster monetisation of leased assets.
"For investors, the benefits are faster partial or full exit from project, and better valuations. To unit holders, they bring regular income, hedge against inflation, the option to invest in real estate with limited investment and a share of the upside in capital values," JLL said.
PWC India Associate Director Bhairav Dalal said this is an extremely positive move for the Indian Capital Markets.
"It could free up some liquidity for large real estate and infrastructure players. It would provide investors an opportunity to invest in Indian stabilised assets through an Indian listed platform," Dalal said.
Walker Chandiok & Co LLP Partner Neeraj Sharma said it is a good attempt by SEBI by ensuring detailed and quality disclosures in the REITs guidelines.
