First small and medium REIT expected to be listed by October: Naredco

India’s first Small and Medium Real Estate Investment Trust (SM-REIT) is expected to be listed on stock exchanges by the month of October. This will enable small investors to own a share of rent-yielding real estate by investing as low as ₹10 lakh, according to G Hari Babu, president, Naredco, a body of real estate developers.
Addressing a webinar on April 3, Babu said that the launch of the first SM-REIT may happen by September-October.
Last month, the Securities and Exchange Board of India (Sebi) had notified the framework for SM REITs.
Also Read: SEBI notifies SM REITs: Move to regulate fractional ownership industry and safeguard investors’ interests
Elaborating on the benefits of SM-REITs, Babu said that small investors can now invest in rent-yielding real estate assets and earn both rental income as well as capital appreciation. “When you purchase a physical real estate asset, you have to pay stamp duty as well as GST over and above the cost of the property. You would become the owner of your share (of SM Reit) through fractional ownership without having to pay these charges.”
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NAREDCO chairman Niranjan Hiranandani said that SEBI had introduced the REIT almost a decade back. “The benefits were two-fold – large properties were developed by developers and were managed efficiently,” he said, adding the SM REITs are expected to be a new powerful investment instrument as well.
“Introducing small and medium REITs is a positive step towards making real estate investment more accessible in India. By lowering entry barriers and offering diversification opportunities, these REITs intend to attract more retail and institutional investors and boost confidence in the market. This regulatory framework will boost investments, liquidity, and domestic and international capital flows into the real estate sector,” he said.
There are currently three office REITs in the country – Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust and one retail asset backed REIT named Nexus Select Trust.
Amit Kumar Kedia, Director of Kedia Corporate Advisors Pvt Ltd, gave a detailed presentation on SM-REITs.
“Heightening disclosure and adherence standards, the introduction of SM REITs aims to align the REITs market with India’s equity market, fortifying the regulatory landscape and positioning India as an appealing destination for both local and international investors,” said Kedia.
Inspired by the ‘sachetisation’ of financial products, the advent of SM REITs seeks to democratize ownership, fostering accessibility and affordability for a diverse array of investors, added Kedia.
Also Read: Fractional ownership market in India predicted to grow over 10x to surpass $5 billion by 2030: JLL-PropShare analysis
The Indian fractional ownership market is currently estimated at around $500 million and is expected to grow 10 times in the next five years to surpass $5 billion of Asset Under Management (AUM) by 2030, according to an analysis by JLL and Propshare.
Fractional ownership, as the name suggests, empowers investors to own a fraction or share of a property, effectively lowering the entry barrier and enabling a diverse range of investors to participate.
As per the notification, the minimum price of each unit of the scheme of SM-REIT shall be ₹10 lakh or such other amount as may be specified by Sebi from time to time.