Investors in India may finally be able to park their funds in Real Estate Investment Trusts (REITs). This is according to the Asia Pacific Real Estate Association (APREA) which recently convened an international symposium on REITs in India.

At present, investors who wished to be exposed to the real estate market in India can only do so via foreign listed REITs and Trusts such as the Ascendas India Trust.

Participants at the symposium concluded that now is the right time for REITs in India and there is significant institutional investor support and interest. REITs are seen as critical for the development of the real estate industry and capital markets. Globally REITs have been beneficial in improving transparency and standards and improving the professionalism of markets and this will also happen in India.

S.Srinivasan, CEO of Kotak Realty Fund, said: “A majority of the Indian consumers' savings is in property and gold. REITs will enable the industry to tap into this savings pool in a liquid format. The investors will benefit from a transparent and well regulated investment product. The time is right to bring REITs to India”.

Lim Swe Guan, Chairman of APREA, commented: “REITs have attracted significant amounts of cash in recent years responding to investor demand for high yields and stable capital returns. Even though there has been substantial support for emerging Asia REITs, the potential for even larger allocations by both local and global investors exists.

“Recent APREA research shows that India’s share of the global investable real estate market currently is just 1.3%. However, this is expected to increase to 6% in the next 20 years with the size of the domestic investable real estate market rising 16 fold over that period. India REITs are poised to capture a substantial share of such capital inflows”.

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, said: REITs buy properties and put them out on rent, thereby generating income for investors while also adding rental supply to the market. Unfortunately, this model has not yet found a foothold in India. REITs should be implemented in this country so that small investors will get a chance to invest in real estate assets.”

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.