Wed, 29 Nov 2023


New Delhi [India], September 14: Real Estate Investment Trusts (REITs) have emerged as a game-changer in India's real estate market, opening doors for retail investors to monetize rent-yielding assets and explore the vast potential of real estate. In an exclusive interview, we sat down with Maya Sharan Singh, the Director Lares Algotech, a hedge fund management company to gain valuable insights into India's evolving REIT landscape.

The introduction of REITs in India has been nothing short of revolutionary. These investment vehicles offer individuals the opportunity to invest in the real estate market without the burden of purchasing physical properties.

"REITs have democratized real estate investment in India," says Maya Sharan Singh. "Previously, the real estate market was largely inaccessible to retail investors due to the high capital requirements and complexities involved. REITs have changed the game by allowing investors to own a share in income-generating properties."

The four listed REITs have amassed Rs 1.2 lakh crore in Assets Under Management (AUM) and boast a market capitalization exceeding Rs 75,000 crore. Furthermore, they've raised Rs 25,500 crore in equity capital and secured Rs 18,890 crore in debt capital through various offerings. As of June 30, 2023, these REITs have garnered a substantial following, with over 2 lakh unitholders.

Transparency and Regulation

One of the key aspects that Singh emphasizes is the importance of transparency and regulation in the REIT space. He points out that the regulatory framework in India has played a crucial role in building trust among investors. The Securities and Exchange Board of India (SEBI) introduced its draft REIT regulations in 2007. After considerable modifications, the Real Estate Investment Trusts Regulations, 2014 (REIT Regulations), were enacted in India on September 26, 2014. "The stringent regulations governing REITs in India provide investors with confidence," notes Singh.

Monetizing Rent-Yielding Assets

REITs typically consist of income-generating properties such as commercial real estate, hotels, and rental residential properties. Investors in REITs receive a portion of the rental income generated from these properties in the form of dividends. "Investors can enjoy regular income from rent without the hassle of property management," Singh explains. "This makes REITs an attractive option, especially for those seeking a consistent income stream."

Diversification and Risk Mitigation

Diversification is a fundamental principle of investing. REITs offer investors the opportunity to diversify their portfolios by adding real estate assets without the substantial capital outlay required to purchase physical properties. "REITs provide diversification benefits," says Singh. "Investors can spread their risk across various properties and locations, reducing the impact of any single property's performance on their overall portfolio."

Retail Investor Participation

The democratization of real estate investment has been a significant driving force behind the success of REITs in India. "The inclusion of retail investors has added depth and liquidity to the REIT market," he states. "It's heartening to see individuals from various walks of life participating in the real estate sector."

Challenges and Future Prospects

While REITs have brought about transformative changes, Singh also points out the challenges that the sector faces, such as the need for a more diverse range of properties within REIT portfolios and increasing investor awareness. "To sustain the growth of REITs in India, we need to expand the types of properties included in REITs beyond commercial real estate," Singh suggests. "Additionally, educating investors about the benefits and risks associated with REITs is crucial."

As India's real estate market continues to evolve, REITs have proven to be a catalyst for change, allowing retail investors to participate in the sector's growth. With the right support and awareness, REITs can help to fuel India's economic growth and create a more vibrant real estate market.

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(Disclaimer: The above press release has been provided by ATK. ANI will not be responsible in any way for the content of the same)

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