The market regulator
SEBI has introduced draft regulations related to Real Estate Investment Trusts
(REIT). At present, foreign REITs
involve offshoring of ownership of assets and capital markets outside India.
REITs are beneficial
to both investors and the real estate industry. On the one hand, it provides an
exit route for the developer / or industry & for the investors it gives an
opportunity to invest in properties which they would not have normally been
able to take an exposure to.
According to the
draft regulations, REITs may raise money from investors, resident or foreign,
but initially the units may be offered only to high net worth individuals (HNI)
and institutions.
The minimum
subscription per investor will be Rs. 2 lakh and every unit will be of the size
of Rs. 1 lakh. REIT will have a structure similar to that of a mutual fund. The
vehicle of the REIT will be a trust and it will have trustees registered with
SEBI, sponsor, manager and principal valuer. The fully developed real estate
(completed revenue generating real estate assets) will vest in the trust. The
REIT will not invest in vacant or agricultural land.
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