By Ms. Devina Ghildial, RICS South Asia
Real estate investment is one of the toughest and largest investment decisions that one makes in the entire life due to careful financial planning and long-term commitments. Real estate as an asset class is considered by an individual since it garners good return in a long run and also broadens the investment portfolio.
The Central government’s move to grant pass through status to Real Estate Investment Trust (REIT) will usher better investment friendly environment within the country’s real estate sector.
A Real Estate Investment Trust (REIT) is essentially a security that operates similar to a stock on the main exchanges and performs as an investment created in the real estate market directly. REITs get distinctive tax consideration and also provide high returns to investors.
REITs simultaneously, will help real estate segment in crafting opportunities for stakeholders as well as for the investors. REITs act as a special purpose vehicle (SPV) which raises funds from investors, further allocating the money to attain rent yielding real estate and distribute the income to investors.
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| Ms. Devina Ghildial, RICS South Asia |
In a cash starved industry like India REIT will open up new avenues for
revenue generation, it will help monetize rent yielding assets held by
real estate players, endow with more stable equity financing as against
debt financing further it will encourage the real estate rental market.
Moreover, an advantage of investing through REIT is that they hire professionals and legal experts that make sure that the property they are investing in has a free title and is free from any legal mess.Furthermore, investors in REITS will be able to dispense their risks by investing in diversified REIT units rather than pooling in their investment in one property at a time.
REITs to become a reality in India will take some time, as companies who plan to enter the market with their listings seem to be waiting for the time, when there will be more clarity on taxation of REITs. A further clarification is required on the role of managers and valuers as proposed in the regulations.
Valuers who are equipped with technical and financial evaluations should be treated as independent specialised professionals. As per the company’s act 2013, definition of registered valuers restrict the work of valuation to select few members of ICAI, ICS, ICWA, IE and IOA and not recognise members of professional bodies such as RICS and Institution of Surveyors etc. Definition of
Valuers should thus incorporate valuers trained by these professional bodies also.
Our belief is that the government should address the issues relating to double taxation, ownership of assets and the use of professionally trained valuers while implementing REITs in the country.
In addition, appropriate structure and arrangement of the draft would probably be wholly functional from next financial year, thus resulting in real estate firms to start REITs listing from 2016 onwards.
Apart from above concerns REITs invest in various spheres including commercial, residential, retail and rental properties which investors are unable to do within available resources.
For small investors, REITs built a new pavement to stretch their investment plans and portfolio with minimal risks and greater income, which were currently not possible. Therefore, REITS can really be beneficial considering long term growth for the real estate industry in India.
Moreover, an advantage of investing through REIT is that they hire professionals and legal experts that make sure that the property they are investing in has a free title and is free from any legal mess.Furthermore, investors in REITS will be able to dispense their risks by investing in diversified REIT units rather than pooling in their investment in one property at a time.
REITs to become a reality in India will take some time, as companies who plan to enter the market with their listings seem to be waiting for the time, when there will be more clarity on taxation of REITs. A further clarification is required on the role of managers and valuers as proposed in the regulations.
Valuers who are equipped with technical and financial evaluations should be treated as independent specialised professionals. As per the company’s act 2013, definition of registered valuers restrict the work of valuation to select few members of ICAI, ICS, ICWA, IE and IOA and not recognise members of professional bodies such as RICS and Institution of Surveyors etc. Definition of
Valuers should thus incorporate valuers trained by these professional bodies also.
Our belief is that the government should address the issues relating to double taxation, ownership of assets and the use of professionally trained valuers while implementing REITs in the country.
In addition, appropriate structure and arrangement of the draft would probably be wholly functional from next financial year, thus resulting in real estate firms to start REITs listing from 2016 onwards.
Apart from above concerns REITs invest in various spheres including commercial, residential, retail and rental properties which investors are unable to do within available resources.
For small investors, REITs built a new pavement to stretch their investment plans and portfolio with minimal risks and greater income, which were currently not possible. Therefore, REITS can really be beneficial considering long term growth for the real estate industry in India.
About the author
Ms. Devina Ghildial is Deputy Managing Director at RICS South Asia.
Deputy Managing Director, RICS in South Asia
Ms. Devina Ghildial is the Deputy Managing Director for RICS' operations in the South Asia region. As Deputy Managing Director for RICS in South Asia, she is primarily responsible for managing the regions’ operations and has been instrumental in operations, key account acquisition and growth of the RICS in the region.
Ms. Devina Ghildial has more than 16 years of cross-functional primarily in the domains of real estate advisory and private banking/preferred investments. Prior to joining RICS, Devina has worked in senior positions in the wealth/private banking domain with leading organisations such as Barclays Bank Plc, Dawnayday AV Advisors and Kotak Mahindra Bank. Investments being her domain, she advised the ultra high net worth segment.
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| Ms. Devina Ghildial, RICS South Asia |
She has also been a part of the real estate industry in India and worked with Jones Lang Lasalle Meghraj (erstwhile Chesterton Meghraj) and Ansal Properties & Industries Ltd. Her experience gives her a holistic perspective of the real estate (development & consulting side) and financial arena.
Ms. Devina Ghildial has done her Bachelors in Commerce with a specialization in Banking and Finance and Cost and Works Accounting from Pune University and was a distinction student all through. She has also done her Masters degree in Management from Pune University where she topped her College. She also went on to do an Executive Management program from Harvard University.
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India
tele +91 124 4595400
fax +91 124 4595402
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