HYDERABAD: Real Estate Investment Trusts (REITs), which are expected to help the realty sector by pumping in investments, may take some more time to come into vogue in the sector.
REITs are like mutual funds, which collects money from several small investors with the aim of investing in real estate projects. Reits are like a bridge between small investors, realtors and builders in need of funds.
“There is a wait and watch approach on which promoters or sponsors will go for the first Reits listing,” says Rajeev Bairathi, executive director and head – capital markets at Knight Frank India.
According to him, stamp duty is one of the implications that will be sorted out soon. “Yet, there are a few sponsors who are preparing for their first Reits listing. It is up to the sponsors, when they would like to come for the listing depending on the initial restructuring that might take place in their organisation. The first round of REITs may happen in the coming six to 12 months.”
REITs are expected to help and boost the property market by pumping in funds. Therefore, real estate and building companies are looking towards them as a promising option.
“Reits will open an additional and sizeable avenue for realtors and builders. As the realty sector is set to go through many changes post RERA and GST, we are also eagerly awaiting for REITs.
For instance, if we take the example of builders who have completed projects but are unable to exit from them, REITs come in as a help tool. As REITs focus on investing in realty properties, especially rental properties, builders can get out of the project by selling the properties to REITs. But, still clarity is needed and we have to wait for some more time for REITs,” said C Shekar Reddy, past president of Credai.