Expert Zone

Straight from the Specialists

SEBI tries to get it REIT again

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Ease of funding is a key recommendation for the growth and development of the Indian realty sector in the coming decade. New instruments of funding should be allowed into the sector, especially real estate investment trusts (REITs) — an investment mechanism that buys income-generating real estate assets and passes on the yield to investors.

In this current climate of dwindling investor sentiment and a plunging rupee, there is a need to implement funding options such as REITs for infusing much needed liquidity into the sector. The total REIT market size in the Asia-Pacific region is approximately $205 billion but India has been unable to take advantage of this funding opportunity, mainly because of the lack of an existing regulatory framework.

Since India is yet to have such a mechanism in place, the government and the Securities and Exchange Board of India (SEBI) have been working on a regulatory framework for introducing REITs. SEBI had issued draft regulations for REITs back in 2008, but they were withdrawn in favour of allowing asset management firms to launch real estate mutual funds. That initiative too, unfortunately, failed to take off.

Industry majors say India’s taxation regime is a leading impediment and needs to be made conducive for the REITs model to be successful in India. SEBI is trying to revive REIT again and various groups have been assisting the regulator in forming new guidelines. Keeping in mind earlier obstacles, it’s advisable to focus efforts on implementing a tax regime conducive to REITs in India.

India Market Weekahead – Volatility expected ahead of RBI policy review

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

After a rally of 500 points on the Nifty, markets consolidated at slightly higher levels to close at 5850 this week. It’s evident that hope keeps the market ticking — this time it was various measures by the new RBI governor, Raghuram Rajan,that cheered the markets.

But expectations, at times unrealistic, could lead to disappointment. Though Rajan made the right moves, it would be interesting to see how he uses the limited manoeuvrability he currently has. The monetary policy review on September 20 would be closely watched.

Revised takeover regulations – pragmatic and balanced approach

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(The views expressed in this column are the authors’ own and do not represent those of Reuters)

Considering the fast growing Indian economy and level of M&A activity in India, a need was felt to review the current Takeover Regulations of 1997.

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