The Securities and Exchange Board of India has okayed the setting up of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The REITs could help unlock funds, estimated at around Re. 60,000 crore. The new funds can be a lifeline for cash-starved developers whose debts have been rising. The REITs could help developers sell their assets to pay off loans or use the money to launch new projects.
The new norms will help attract more foreign investors to these key sectors and facilitate inflows worth $ 15-20 billion from domestic and overseas sources. The requirements of minimum asset size have been halved and foreign investments have been allowed in REITs.
The REITs can invest up to 20 % of their assets in mortgage-backed securities, under-construction assets and equity and debt of real estate companies. This can further expand the assets that these companies can sell to the REITs. However, it may 6-12 months for REITs to be launched. DLF, the largest developer, will be a key beneficiary of the REITs.