Unlocking Real Estate Investment: The Emergence of Small and Medium REITs in India
Real estate has long been a preferred investment avenue for many Indians, who often prioritise property ownership over financial assets like stocks, bonds, or mutual funds. However, the high capital requirement has kept many potential investors at bay. Enter fractional ownership and the recent amendments by the Securities and Exchange Board of India (SEBI), which are set to revolutionise the landscape of real estate investments through the establishment of Small and Medium Real Estate Investment Trusts (SM REITs).
What is Fractional Ownership?
Fractional ownership refers to dividing the value of an asset among multiple investors, each holding a share of the property. In India, this concept is gaining traction in the real estate sector, particularly for commercial properties. Fractional ownership allows individuals with limited resources to invest in high-value real estate by pooling their money with other investors through fractional ownership platforms (FOPs). This democratises access to real estate investments, making it feasible for a broader range of investors.
The Role of SM REITs
The recent amendment to the Real Estate Investment Trusts Regulations, 2014 by SEBI introduces the concept of SM REITs. These trusts are designed for smaller investment amounts, ranging from Rs 50 crore to Rs 500 crore. This move is aimed at bringing the largely unregulated FOPs under a formal regulatory framework, ensuring greater transparency and investor protection.
The key objective of the recent SEBI notification of SM REITs is getting fractional ownership platforms into the regulatory framework. The new guidelines provide a platform for FOPs to exist through the formation of REITs and, more importantly, bring full transparency to investors in terms of disclosure and governance.
Benefits of Investing in SM REITs
Investing in SM REITs offers several advantages:
- Accessibility: With lower minimum investment requirements, SM REITs make real estate investments accessible to a larger pool of investors..
Explore further insights on this subject on our website:
