Indian trade experts are calling for the introduction of real estate investment trusts (REITs) to attract institutional property investment firms.
The Associated Chambers of Commerce and Industry of India (Assocham) also said the move would help to “discipline” the domestic real estate market.
The group said it had written to the Securities and Exchange Board of India backing the introduction of REITs.
REITS sell like a stock on exchanges and invest in real estate on behalf of share holders, usually enjoying tax breaks.
Assocham said:
“Since the purchase and sale of real estate assets would form part of the activity of REITs, the presence of a large number of REITs can enhance liquidity in the secondary market for commercial real estate.”
The group added REITs can also offer better investment opportunities as they normally include “a better spread of risks as compared to a regional developer who offers mortgages on a few similar properties often located in the same market space.”
In the US REITs are still outperforming the broader property market, the National Association of REITS (NAREIT) has said.
The organisation also said REITs in the US have seen their equity market capitalisation soar from $90 billion to more than $300 billion in the last 10 years.
India Real Estate News, November 2008
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