Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd.
The formation of Real Estate Investment Trusts (REITs) will help in the expansion of the quality real estate universe in India, besides giving developers another instrument to exit their projects.
REITs would own real estate, and most of them are expected to have their shares listed on the stock market. These listings will provide retail investors a good and an entirely new opportunity to participate in real estate’s growth story in India.
However, would an industry that has not been able to exploit its full investment potential so far be able to attract droves of retail investors? With REITs, the answer is yes.
This instrument has the potential to attract institutional and retail investors alike because of its inherent nature to provide regular dividends at relatively low-risk levels.
And why is that? One, because REITs in India will prefer to invest in commercial developments — specifically in the highest quality or Grade A properties — due to the higher rental yields in this asset class.
Two, because only 20% of an Indian REIT’s monies can be invested in development,