India’s first Infrastructure Investment Trusts (InViTs) was listed in 2017. The country’s first Real Estate Investment Trust, Embassy REIT, made its debut in April this year. While India’s REIT market has growth potential, it “still has to ride the wave of teaching people what REITs are,” says Sigrid Zialcita, APREA’s newly appointed CEO.
In this interview with REITAsiaPac, she also elaborates on the tax implications for investors and the relative pros and cons of an India-focused REIT listing in India versus offshore.
There have been some Infrastructure Investment Trusts (InvITs) listed in India and now the first REIT. How have the InvITs performed and how do you see the REIT and InvIT markets developing over time?
The Embassy REIT has had a great start, and it has opened up an avenue for the investors to gain a share of the real estate sector. By selling stabilised assets to REITs, developers can unlock capital that can be more effectively deployed in new development projects. Embassy’s portfolio is on a strong foundation with more than 95% occupancy and about half the rentals accruing from Fortune 500 firms. REITs are expected to provide a low double-digit return over a period of time which will include a dividend yield of 6-8% which is trending up besides capital appreciation, thereby leading to a 12-13 % return. With the possible retail participation, Indian REITs present a golden opportunity for investors as an alternate investment option and a share of real estate without owning it, thereby getting regular income and capital appreciation over a medium to long-term investment period. India still has to ride the wave of teaching people what REITs are, in contrast to the U.S., where investor education has gone straight into what REITs can do for investors’ investment portfolio.
InvITs have been underperforming since their listing. However, distributions have so far been on track. The first InvIT was listed earlier in 2017: IRB InvIT Fund, which owns toll roads, debuted and then India Grid Trust InvIT, which owns power transmission projects.
InviTs have not been doing well due to lack of understanding.
Read the full interview at REIT AsiaPac