Investors now have a new avenue for investment with Sebi finalising the long-awaited guidelines, and even relaxing some of the stiff requirements, so that it becomes easier to regulate and set up real estate investment trusts (REITS) and infrastructure investment trusts (InvITs). The draft guidelines for REITS were ready last year but the then government delayed taking decisions on the demands of industry. The new finance minister, Arun Jaitley, had in his Budget speech said the government would provide the necessary tax incentives for making investment in REITS attractive and this helped Sebi expedite and issue the final guidelines.
However, according to reactions from industry, there is still more clarity needed on the taxation aspect. Hopefully, if the government feels the demand is justified, it will look into the matter and do the needful so that both REITS and InvITs can get off to a flying start. The industry is expecting investments of between $15 billion to $20 billion from domestic and foreign long-term investors, including NRIs. This would be a boon to the cash-starved real estate and infrastructure industries, which have suffered from a lack of easy access to credit from banks. It is a good thing that Sebi has stated that REITS can invest in only listed commercial property. The real estate industry is riddled with all sorts of problems and regulation is of utmost importance. With even retail investors investing in REITS, it is necessary to see that their money is protected and they are not faced with losses as in the IPO markets.
