A lower entry level is one of the primary benefits of investing in REITs. As per SEBI, the regulator of REITs in India, the minimum unit size will stand at Rs 1 lakh, while the maximum subscription size will stand at Rs 2 lakh. In addition to it, since REIT corpus will invest in built-up property, it will reduce the risk related to construction.
At present, a large sum of black money is in circulation within the real estate industry. Introduction of REITs will bring white money in circulation and generate more transparency in the realty sector. Furthermore, REITs will have professional managers. This would ensure a more judicious approach towards the realty portfolio and yield higher return for investors.
With the taking off REIT in India, the commercial real estate sector of the nation will again gain momentum. In addition to it, it will help the developers unlock the value of the assets and create liquidity. REITs utilize investor’s fund to purchase real estate assets for capital and rental gains. This aid the buyers make the most from real estate price appreciation and avoid the issues related to buying and maintaining properties.
The move taken in regard to listing of REITs in India as an investment spin-off, will provide the much needed aid to the cash-starved realtors. This, eventually will kick-start all the pending construction activities.
In addition to it, REITs will also promote the investor sentiment in the nation. As per experts, REITs will offer an investment avenue that will prove to be less risky in comparison to under-construction properties.
REITs are registered as trusts with the SEBI, which offer their units to investors and use the funds to buy leased out commercial real estate. Although the sector is growing at a fast pace, it lacks a tradable investment option. While mutual funds direct their corpus in debt, equity and money markets, REITs focus on real estate market, especially in revenue generating real estate.
With the REIT (Real Estate Investment Trust) move, the government has made a severe attempt to inject the idea of Equity and Unit in the realty sector. Such a concept, which is prevalent in other nations, is yet to find its relevance in India.