Efforts on in Indian realty sector to bring back NRI investors
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Efforts on in Indian realty sector to bring back NRI investors

By siliconindia   |   Monday, June 15, 2009   |    1 Comments


Bangalore: Real estate market is recovering rapidly in India especially with the new government that is investment friendly, coming to power. With a view to attract NRI investors, Market regulators SEBI [Securities and Exchange Board of India] has been discussing with experts to setup a frame work for Real Estate Investment Trusts (REITs). Last year in April, SEBI has tried to set up norms for Real Estate Mutual Fund but it was delayed due to market meltdown. According to a recent research by brokerage Motilal Oswal, the improvement in the global REIT market will positively impact commercial real estate in India. Currently Indian Real Estate lacks monetization. Recovery in REIT demand might prompt leading commercial real estate players such as DLF, Unitech and IBREL to re-draw their REIT plans. REIT helps in reducing or eliminating corporate income tax for company that invests in income tax. REIT is like a security that sells like a stock on the major exchanges and invests in real estate. It can do that directly, either through properties or mortgages. It receives special tax considerations and it offers investors high yields. Like other corporations, REITs can be publicly or privately held. Real Estate Mutual Funds (REMFs) are the Indian versions of the international REITs platform, adapted to the existing Indian mutual funds platform. Investors can buy shares in those funds, which are traded on a daily basis on stock exchanges. The value of the shares depends on the value of the underlying real estate assets. The leveraging allowed in case of Indian REITs is the lowest (at 20 percent of the value) compared to 35 percent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 percent in case of Korea. But this could result in a lower yield and because it is not really leveraged, the risk taken is also more. Speaking to Express Estates, Dr Devinder Gupta, CMD, CENTURY 21 India, opined that with the formation of a stable government at the Centre, the realty sector has a high expectation from the new government.

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