REIT moves one step closer to becoming a reality
According to Jones Lang LaSalle, 80-100 million sq ft of office space worth at least Rs 60,000 crore may qualify to be included under REITs
With REIT being incorporated under the Foreign Exchange Management Act (FEMA) as an eligible financial instrument, real estate developers and industry watchers say it will fast-track their listing in the domestic market.
Several real estate players, such as Unitech, DLF, Embassy, Prestige, Supertech and Blackstone are among those that have evinced interest in REIT listings as an alternate mode of fund raising.
Liquidity-infusing step
Rajeev Talwar, Group ED and board member, DLF, said, “The government has paved way for smooth launch of REITs by amending the FEMA. It will help the real estate-linked financial instrument to attract foreign funds. The Cabinet approval closely follows a crucial decision by the government on the issue of minimum alternate tax.
“The measures are expected to boost fund flows and pave the way for infusing much-needed liquidity into the sector. This move will also hasten construction activities. DLF has already announced its intent to launch REITs and we reiterate our commitment to set up a REIT within this year itself, consequent to receipt of all necessary approvals.”
REITs are instruments which allow owners of rent yielding assets (commercial and retail) to raise money from investors by pooling and listing them as a trust.
DDT exemption
Anshuman Magazine, CMD, CBRE South Asia, said, “It is another good move to enable REITs to start functioning in the country. The only other industry demand pending in this regard is the demand for exemption of DDT. At a time when the realty sector is struggling for alternative avenues of funding, REITs will improve liquidity in the commercial real estate market.”
The finance minister in his Budget 2014-15 speech had proposed the introduction of REITs.
According to Jones Lang LaSalle, 80-100 million sqft of office space worth at least Rs 60,000 crore may qualify to be included under REITs. These assets could together generate rentals of Rs 6,000 crore annually.
- by Bindu Menon
Source :- The Hindu Business Line
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