REITs for Retail Investors

Podcast | 15 April 2019

Real Estate Investment Trusts or REITs were first introduced in the US in 1960s, with the purpose to give the average investor access to real estate investment. REITs have developed into a mature asset class over the last 60 years, providing access to quality investment- grade real estate portfolios with liquidity due to REITs being listed on the stock market.

With the first Indian REIT from Embassy Blackstone being oversubscribed 2.5 times, it could open up an alternate investment source for the retail investors.

The Securities and Exchange Board of India’s (SEBI) creation of a robust REIT framework will allow global and domestic investors to participate in the growth and the returns the commercial real market has historically provided to private capital players.

SEBI has also ensured skin in the game to protect investors’ interests and corporate governance. REITs are globally used to securitise income-generating properties and help to improve the depth and maturity of the real estate sector. Historically, the Indian real estate sector has been marred with controversies and lack of transparency which has now undergone a volte face with RERA and GST coming in play.

The Indian REIT further infuses transparency and corporate governance that will make the sector buoyant. Perhaps this is the reason why the regulator has consciously limited the Indian REITs retail participation to large retail investors who would invest for long term and provide stability to the market before small retail investors participate.

World-wide REITs is open to pure retail participation. Infact REITs across the world are tried and tested platforms for building the retirement wealth of families and individuals. Retail investors are representing the growing demand for REIT shares and tend to be long-term holders, which can help to dampen share price volatility as per a NAREIT report. REITs offer higher income returns than fixed-income investment and are relatively stable through periods of fluctuating economic cycles.



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