Small and Medium REIT To Put On The Stock Exchange

In order to redefine investments in Real Estate in India, the first Small and Medium Real Estate Investment Trust (SM-REIT) is slated to be listed on stock exchanges by October. The initiative is headed by Naredco and aims to ensure democracy in ownership of rent-yielding real estate assets, making the area accessible for both retail and institutional investors. The idea is to keep investments as low as Rs. 10 lakh.

REITs (Real Estate Investment Trusts) are the body of investments that own, operate, or finance income-generating real estate across various sectors like commercial, residential, or industrial properties. Investors here buy shares in REITs, which, in turn, are invested in a diversified portfolio of real estate assets. These investments provide regular income for investors through yields from rents and the potential increase of capital.

This launch has been an outcome of the Securities and Exchange Board of India (SEBI) notifications regarding the regulation and framework for such trusts which aims to regulate such fractional ownerships and safeguard the interest of the investors. By reducing entry barriers and offering opportunities to diversify, SM-REITs intend to attract a wider investor base to boost confidence of the people in the real estate market.

The major attraction the SM-REITs provide is fractional ownership, which allows investors to own a share of high-value real estate assets without the burden of additional charges like stamp duty and GST associated with buying the properties. This model aspires to increase affordability and accessibility, aligning with the trend of ’sachetisation’ of financial therefore regulating such ownerships.

The Chairman of Naredco, Niranjan Hiranandani, highlighted the combined benefits of REITs that is the efficient management of large properties by developers and introducing instruments for powerful investments. The aim is to ensure growth in both the domestic and international sectors.

Amit Kumar Kedia, the Director of Kedia Corporate Advisors Pvt. Ltd., emphasized the importance of disclosure of different aspects in investments and adherence to the standards of the framework of SM-REIT.

The SM-REIT market is expected to experience high rates of growth, as the projections are indicating a tenfold increase in the Assets Under Management (AUM) by the year of 2023. The amount is deemed to be exceeding over $5 billion. This growth projections illustrates the immense potential that this kind of investment structure possess and the overall development it can unlock in the market.

At present, in India, there are 3 different REIT offices, and one retail-asset backed REIT which regulates the market, which is supposed to expand with the introduction of SM-REITs.